FTSE 100 Friday close: Lloyds soars, Barclays falls

2nd August 2013

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The FTSE 100 closed on Friday 34.11 points or almost 1 per cent down on the day but 1 per cent better over the week at 6,647.87.

News on Friday that the US unemployment rate fell to 7.4 per cent from 7.6 per cent failed to cheer markets as the employment figures were lower than expected.

Experts were divided over the implications for when the Federal Reserve would begin tapering back its massive £85bn bond buying programme.

UK banks dominated headlines this week with Lloyds Banking Group, announcing a return to profit.  The 39 per cent taxpayer owned bank, witnessed its shares rally after it unveiled a profit of £2.1bn for the first half of 2013, compared to a loss of £456m for the same period last year.

The results have caused increased conjecture over how soon the government might look to sell off its stake. But Deputy Prime Minister Nick Clegg was quick to assert that the government is in no rush to offload the shares. Over the week, Lloyds’ shares jumped 8 per cent to close at 73.73p, comfortably ahead of the 61p break-even level.

The 81 per cent taxpayer owned Royal Bank of Scotland, is down 2 per cent over the week at 322.5p despite unveiling a rebound in pre-tax profits to £1.4bn over the first half of the year, a stark contrast to its £1.7bn loss for the same period last year

The bank also announced the appointment of Ross McEwan as Stephen Hester’s successor. The incoming chief executive, who starts on 1 October said he did not want to receive a bonus for the rest of this year or in 2014.

But better results aside, the sector still has many obstacles to face. The Times reported today that UK banks were set to take an £18bn hit over the mis-selling of payment protection insurance.

In addition, the Prudential Regulation Authority said Barclays, the week’s steepest faller on the FTSE 100, has to find almost £6bn from its shareholders to bolster its capital reserves against any market volatility. The news hammered its shares which fell by 11 per cent to 285.45p. Elsewhere, HSBC, which updates the market next week, saw its shares firm 3 per cent to 754.7p.

The topflight index’s highest climber over the week was International Consolidated Airlines Group, owner of British Airways, which after a positive market update for the second quarter saw its shares rise 10 per cent to 317p.

Broadcaster ITV, 6 per cent stronger at 166p, was also reporting this week. The group confirmed that in the first six months of the year the business continued to increase group profits and revenues despite the expected fall in advertising over the first half of the year. Non-advertising revenues were up by 11 per cent to £568m.

British Gas parent Centrica, up 3 per cent at 390.1p, was the source of much controversy after it declared a 9 per cent rise in half-year operating profit to £1.58bn, only a few months after raising its prices. Alongside an update from HSBC, next week sees the arrival of reports from Intercontinental Hotels and insurer Legal & General.

 

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