News of changes at the top of banking giants Barclays and HSBC received a lukewarm response from investors today as the wider market ended its recent strong run.
Bob Diamond’s promotion to replace John Varley as chief executive of Barclays failed to boost shares, while HSBC also slipped into the red after it announced chairman Stephen Green was to become the Government’s new Minister for Trade and Investment.
Fresh concerns over the eurozone brought the Footsie’s rally to an end, with the index closing down 31.4 points at 5407.8 – the first finish in the red for seven sessions.
Wall Street’s Dow Jones Industrial Average fell 0.7% after official figures showed a bigger-than-expected drop in German manufacturing orders in July of 2.2% month-on-month.
Markets on both sides of the Atlantic were also unnerved by a report in the Wall Street Journal which claimed the EU stress tests of 91 banks in July understated some lenders’ holdings of potentially risky debt.
The pound gained ground on a weak euro, up 0.5% to 1.20 euros, but ongoing concerns over the strength of the UK economy hampered progress against the greenback, down 0.3% to 1.53 dollars.
The high profile promotions and departures in the banking sector dominated the stock market in London.
The appointment of American-born Barclays Capital boss Mr Diamond to the helm was met with caution in the City amid worries it could increase emphasis on the riskier investment banking operation. Barclays saw shares drop 3% or 8.9p to 314p.
HSBC shares initially saw a good run after Mr Green announced his departure, but they later dropped 0.4p to 662.4p.
Meanwhile, a cautious note on the retail sector from brokers at HSBC meant a number of stocks in the sector were under pressure.
HSBC lowered its price targets on Next and Home Retail Group, which fell 19p to 2033p and 4.6p to 222.5p respectively, while Marks & Spencer was 5.6p cheaper at 354.1p.
A shortened risers' board featured supermarket chain Morrisons, which lifted 1.6p to 291p ahead of half-year results on Thursday.
Elsewhere, shares in online grocery firm Ocado remained under pressure after the recently-listed stock disappointed investors with a smaller than expected rise in third quarter sales.
Shares, which floated at 180p in July and fell to 130p last month, were down 11p at 146p, a drop of 7%, as Clive Black of Shore Capital said he did not expect Ocado to make any “meaningful” profits for at least another five years.
And Connaught shareholders were left fearing the worst today after the social housing firm requested a suspension in trading of its shares and said lenders had refused to provide further cash. Shares have fallen by more than 90% to just over 16p.
The biggest Footsie risers were Invensys up 18.6p to 269.2p, Tullow Oil ahead 46p to 1228p, British Airways up 6.2p to 227p and Severn Trent up 32p to 1365p.
The biggest Footsie fallers were Man Group down 9.7p to 225.7p, Cable & Wireless off 2.7p to 70.1p, Segro down 8.3p to 266.7p and Icap down 12.5p to 419.4p.