The London market was dragged into the red today as financial stocks foundered on concerns over the banking sector.
Lloyds Banking Group led the fallers with a 7% slump on speculation that the bank will turn to investors to raise £15bn (€17.5bn) in an attempt to limit its exposure to the UK government’s asset protection scheme.
The wider FTSE 100 Index also dropped more than 1% – by 50.9 points to 4671.3 - amid investor jitters.
In the US the Dow Jones Industrial Average fell 1% as Federal Reserve policymakers begin a two-day meeting. Economists expect interest rates will be held at near zero, but investors will be keeping a close watch on what the Fed has to say about the health of the US economy.
Meanwhile, official figures showed that the UK trade balance widened by more than expected in June.
Tomorrow’s Bank of England Inflation Report will set out how well the UK economy is faring, which has also provided a pause for thought for investors today.
Lloyds was top of the losers chart with a fall of 6.9p to 90.99p following a 4% slump yesterday.
Royal Bank of Scotland joined it on the fallers board, falling 2.48p to 42.83p. The bank’s shares have also been shaken by chief executive Stephen Hester’s pessimistic view on the bank’s pace of recovery.
Even a £1bn-plus takeover agreement failed to lift life assurer Friends Provident. Shares dipped 2p to 73p despite its announcement that it had recommended an offer worth £1.8bn (€2.1bn) from investment firm Resolution, falling short of the 79.4p offer price.
Other insurers fell into the red after Friends also posted a worse than expected 38% fall in underlying first half operating profits to £131m (€152m).
Aviva dropped 6% – or 23p to 358.3p – while Legal & General lost 3.3p to 62.95p.
Rugeley power station owner International Power led the Footsie risers board, up 7% or 18p to 266.4p, after it posted a 12% rise in half-year operating profits to £555m (€646m) and hiked its dividend by 19%.
This was well received by the rest of the utilities sector, with National Grid up 6p at 570p and Scottish & Southern Energy ahead 11p at 1126p.
Elsewhere on the results front, services and maintenance firm Interserve rose 4% or 8.2p to 235p in the FTSE 250 Index after reporting a 19% rise in interim profits and reiterating its hopes for strong long-term growth.
Bakery chain Greggs slipped 11p to 400p as a 7% rise in half-year profits was offset by signs of slower sales growth in recent weeks.
Broadcaster ITV was another strong mover in the FTSE 250 after Morgan Stanley upgraded the company in the wake of last week’s half-year results. Shares responded to the note with a gain of 1.46p to 44.96p.
The biggest Footsie risers were International Power up 18p to 266.4p, Rexam up 14p at 245.5p, Reckitt Benckiser up 47p to 2785p and National Grid up 6p at 570p.
The biggest Footsie fallers were Lloyds Banking Group down 6.9p at 90.99p, Aviva off 23p at 358.3p, Kazakhmys down 54.5p at 852p and Liberty International off 28.6p at 454.4p.