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Banks were back on investors' buy lists today after French giant BNP Paribas announced it is paying back its government ahead of schedule.
BNP is tapping investors for €4.3 billion (£3.9 million) to escape from the French government's clutches, raising hopes that the entire European banking sector is on the road to recovery.
Sentiment was improved by relatively upbeat comments from bank bosses John Varley of Barclays and Stephen Hester of Royal Bank of Scotland at Bank of America Merrill Lynch's insurance and banking conference in London today. RBS jumped 1.2p to 52.9p, Barclays was 7¾p better at 372¾p and Lloyds Banking Group put on 1.9p to 105.6p.
Hester, chief executive of 70% taxpayer-owned RBS, said that the sale of the bank's non-core Indian and Chinese assets is now “well advanced” and that its aircraft leasing business is also going under the hammer.
Shares in London managed to claw their way back into positive territory towards the end of play. The FTSE 100 index put on 1.2 points to 5166.90 in thin trading as a gain from the financials just offset a decline in commodity and property stocks. In New York, with the Dow fell 4.15 points to 9785.21.
Has Legal & General found a suitor? Shares in the life insurer soared 3¾p to 82¾p — pushing it to the top of the FTSE winners' board — on speculation that a predator is stalking the company. Talk in the City is that it is not Clive Cowdery's Resolution that has come knocking, however. Rather Italian giant Generali and Australia's AMP are being touted as possible bidders.
Although many traders weren't buying the rumour — one dismissed any interest in L&G as “a bit of puff” — more than 42 million L&G shares changed hands. Insurers were also stronger on talk that European solvency directives could be weakened.
Oriel Securities reckons Ted Baker will be the next company to suffer because of the rising number of young people out of work, warning that the clothing retailer is a “hostage to unemployment numbers”. Clubs operator Luminar, online fashion retailer Asos and clothing group JD Sports Fashion have all admitted that the growing number of jobless youths is hurting business and Oriel reckons young men are reining in spending the most — bad news for Ted Baker for whom menswear makes up 55% of sales.
Ahead of its interims next week, the broker advises dumping Ted Baker shares, although it has kept its forecast for full-year pre-tax profits of £16 million. The shares rose 9½p to 430½p.
Renishaw staff were today celebrating a halving in their pay cut, and the markets were cheered by the news too. Shares in the hi-tech engineering firm shot up 11p to 562p after the company said that a recent surge in orders meant salaries will now be just 10% lower between now and Christmas, before being returned to their full level at the start of next year.
Miners were marked lower ahead of the Chinese Golden Week holiday which starts on Thursday. Randgold Resources fell 71p to 4323p, platinum producer Lonmin plunged 56p to 1647p and Anglo American sank 23p to 2049p.
The property giants were also suffering after Credit Suisse downgraded the UK real estate sector from overweight to equalweight. The Swiss bank's pointy-heads recommend reducing exposure to domestic British industries, warning that the UK recovery will be slower than other countries Land Securities fell 16½p to 640p, British Land lost 2.9p to 483.9p and Hammerson shed 5p to 404½p. Credit Suisse's strategists advise switching into international stocks such as Glaxo-SmithKline, off 5½p at 1245½p, and BAE Systems, 2p dearer at 345¾p, both of which make more than half their sales overseas.
AG Barr, the maker of Scotland's other favourite drink Irn Bru, advanced 75½p to 825p after posting a 20% jump in pre-tax profits for the first six months of the year. Sales were boosted by last year's buy of fruit drinks maker Rubicon. Brewin Dolphin advised clinging on to the shares and sets an 800p price target.
Tesco added 3p to 35¾p after brokers gave mixed predictions for its first-half results on 6 October. Royal Bank of Scotland is a fan of the supermarkets titan, rating the shares a buy, with a 502p price target. But Société Générale is a seller, warning that Tesco's performance is lagging behind its grocery rivals.
