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Banks led the way on the stock market today, with more than half a billion shares in Royal Bank of Scotland changing hands, adding more than £2 billion to its value, even though it reported a record £24.1 billion loss.
The shares climbed 5.4p to 28.5p, with dealers claiming a line has now been drawn under its toxic assets, and the Government-controlled bank can focus on cutting costs and rebuilding its balance sheet.
RBS was followed by Lloyds Banking Group, up 14.1p to 71.5p on hefty turnover of more than 120 million shares. The UK's biggest mortgage provider, which reports tomorrow, has already declared that losses from its HBOS subsidiary are expected to reach almost £11 billion.
The two banks are expected to dump a total of £500 billion of toxic assets into the Government's proposed asset protection scheme, which it is hoped will leave them to start with a clean sheet. Panmure Gordon says the favourable pricing of the asset protection scheme will remove immediate concerns about capital and an additional capital injection by the Government.
Barclays, which remains outside the Government's golden circle, celebrated with a rise of 9.6p to 115.2p on turnover of 75 million shares while HSBC, which reports next week, jumped 34¼p to 526¾p.
The move by the banks provided renewed impetus among City investors, who shrugged off another poor performance in New York last night. The FTSE 100 index rose 53.55 to 3902.53.
Insurer RSA responded to its latest trading update and news of job losses with a rise of 15.2p at 141.2p. Shore Capital has repeated its buy rating on the shares and described the group's 2008 performance as "powerful". The results helped boost Legal & General, up 6.1p at 41p, and Old Mutual, 3.3p better at 43.9p. Prudential, which has endured some wild price swings in the past few days, gained 26¾p to 294½p.
Hammerson showed a loss of 106p at 228p as trading began in the nil-paid at 76p. It follows the property developer's move to raise almost £600 million by way of a seven-for-five rights issue at 150p. British Land rose 8p to 430¼p, and Land Securities added 12p to 539½p. Both companies have chosen to tap shareholders for extra cash.
Goldman Sachs has repeated its neutral rating on Land Securities, but dropped its target from 714p to 671p in the wake of its rights issue. Goldman says the extra £755.7 million will give the group significant protection from entering the final tier three level of its debt covenant structure.
Property companies have been forced to raise extra funds because of falling property values, which have forced up debt levels. Segro, formerly Slough Estates, has successfully renegotiated banking covenants on loans totalling £1.7 billion and begun selling assets.
Numis has raised the shares from sell to buy and says the company is now in a good position to launch a rights issue of its own. However, it has lowered the target for the shares from 245p to 125p.
Dunelm put on 24½p to 188p. The homeware retailer has been having a good recession, helped by its value-for-money appeal. Like-for-like sales grew by 4.4% in the eight weeks to 21 February, boosted by a successful winter sale. Pre-tax profits edged up £100,000 to £27.3 million.
Children's television producer Entertainment Rights, which owns characters such as He-Man, Casper The Friendly Ghost and Postman Pat, is in advanced talks with bidders for the sale of certain parts of the business.
Neither a sale nor the alternative of a bank-supported restructuring would result in any value being attributed the shares, down 0.4p to 0.15p.
The pub-chain operators enjoyed a rare flurry of support. Mitchells & Butlers, the subject of stakebuilding gossip much of this week, rose a further 4p to 230½p. Enterprise Inns was also in demand, adding 9¼p at 54¼p, while Greene King put on 17½p at 409p and JD Wetherspoon 10¼p to 398¼p.
