FTSE slips into the red

The FTSE 100 slipped into the red today as a surprise rise in US benefit claims took the gloss off decent half-year profits from insurer Aviva.

The London market gave up early gains to finish 20.4 points down at 5365.8 after initial unemployment claims confounded expectations by rising to 479,000 last week, sparking more recovery doubts and sending Wall Street’s Dow Jones Industrial Average down early on.

But Aviva still topped the risers board with a 7% or 26.4p gain to 394.3p as it increased its dividend on the back of a third consecutive quarter of sales growth and profits of £1.27bn (€1.53bn), a rise of 21% on a year earlier.

The pound was flat at 1.58 against the dollar and 1.20 against the euro as the latest no-change move from the Bank of England offered no surprises.

The interim bank reporting season has so far confirmed the sector’s return to health following the financial crisis, with even embattled Royal Bank of Scotland – down 0.1p at 52p – expected to show profits tomorrow.

Lloyds, which was the London market’s biggest riser yesterday, added another 1.5p to 76p.

Barclays’ results were in line with expectations, but shares fell 15.85p to 324p as investors sealed in profits following a 31% hike in the past month.

The bank reported a 44% leap in half-year profits to £3.9bn (€4.7bn) – up 22% on an underlying basis – but said Barclays Capital revenues dropped 15% during the second quarter.

As well as the surge for Aviva, fellow insurer and More Than parent company RSA Insurance made gains after its half-year figures also impressed.

Shares rose 3% or 5p to 133.5p as RSA joined Aviva in lifting its dividend and highlighted “good top line momentum” despite a 3% fall in first half operating profits as a result of one-off claims costs.

Prudential, which is also expected to deliver a dividend boost in results next week, joined the insurance sector rally with a rise of 13.5p to 582p.

On the fallers board, shares in consumer products group Unilever were under pressure after it said it may find it hard to recoup rising commodity costs. With underlying sales growth also slowing in the second quarter, shares dropped 5% or 95p to 1736p.

The pressure on other consumer-facing firms due to the twin threats of weak demand and rising costs was again evident in the top flight. Tesco dropped 1.8p to 399.4p while Costa coffee shop owner Whitbread fell 28p to 1409p.

Outside the top flight, shares in Ladbrokes jumped 4% – up 6.8p to 145.5p - after new chief executive Richard Glynn reported a 5% rise in operating profits and flagged the potential for further operational improvement.

The biggest Footsie risers were Aviva up 26.4p to 394.3p, RSA Insurance up 5p to 133.5p, Schroders up 47p to 1385p and Eurasian Natural Resources up 23p to 985.5p.

The biggest Footsie fallers were Cobham down 16p to 224p, Randgold Resources off 320p to 5395p, Unilever down 95p to 1736p, and Fresnillo off 55p to 1043p.