FTSE almost static

Investors in the British banking sector were spared more misery today after Royal Bank of Scotland posted better-than-expected losses of £3.6bn (4.08bn) for 2009.

RBS shares rose 6% following the results, while Lloyds Banking Group improved 3% during an otherwise lacklustre session for the FTSE 100 Index, which stood less than one point higher at 5343.5.

The rise of 2.4p to 38.5p for RBS narrows the current paper loss for the taxpayer but the British government's 84% stake in the NatWest owner is still 30% - or £13bn (€14.7bn) - down on the £45.5bn (€51.55bn) it has pumped into the bank.

The RBS loss was less than the £5bn (€5.66bn) feared by analysts, while the City also noted an encouraging fourth quarter performance and signs that the banking giant may be over the worst in terms of bad debt impairments.

Lloyds Banking Group will take its turn in the spotlight on Friday, but in the meantime shares rallied 1.8p to 55.3p following the RBS news. The public purse is also nursing a loss of around £6bn (€6.8bn) on the British government's 41% stake.

The rest of the London market was again struggling for direction, despite yesterday's helpful comments from Federal Reserve chairman Ben Bernanke on the outlook for US interest rates.

Wall Street markets were higher following the comments to Congress, but the boost proved to be short lived in London today.

Centrica provided the other main interest of the session after its British Gas residential arm achieved higher than expected profits of £595m (€674.2m). This fuelled anger among consumer groups but pleased investors as shares rose 6.6p to 278.7p.

In a busy session for corporate results, Mecca Bingo owner Rank rose 5%, or 4.55p to 98.7p, after it reintroduced dividend payments and reported a solid start to trading in 2010.

Shareholders of homewares chain Dunelm were also celebrating after the company announced plans to return £43m (€48.7m) of surplus cash. Beneficiaries include chief executive Will Adderley, who owns 34% of the business and stands to net around £14.6m (€16.5m) from today's payout.

The move came as Dunelm announced a 69% rise in half-year profits and said it was confident of overcoming challenging trading conditions in 2010.

Other strong risers in the FTSE 250 Index included engineering firm GKN after it posted a smaller full-year loss and said restructuring efforts in the last year should pay off in 2010. Shares rose 7% or 7.8p to 111.4p.