London close: Banks tumble following Citi downgrade
Big losses for the banks following a downgrade for Citigroup sent Footsie spinning into the red by the close.
Citigroup could have to cut its dividend, sell assets or raise new funds to restore its capital base according to CIBC World Markets. Barclays, Northern Rock, Lloyds TSB, HSBC and HBOS all slumped in sympathy despite last night's cut in US interest rates.
Reports that Northern Rock is likely to knock on the door of Lloyds TSB again to try to entice the high street bank into buying the stricken Newcastle-based lender added to their decline, while Royal Bank of Scotland joined the retreat as Lehman Brothers restarted coverage of the bank with an 'underweight' rating and 500p price target.
Housebuilders also fell sharply, with Taylor Wimpey retracing some of yesterday's gains. Barratt Developments has also taken a hit, while electricals retailer DSG International gave back some of Wednesday's bid speculation inspired gains.
Unilever led the Footsie risers after it said growth momentum was sustained across all regions and categories, which was broadly in line with markets.
Oil major and rumoured bid target BG delivered better than expected third quarter earnings Thursday and cheered continued progress in its long-term growth programme. Earnings during the three month period rose to £368m from £342m a year ago, more than the £353m analysts had predicted. A 6% hike in operating profit to £672m was ahead of the £665m forecast. BP lost earlier gains as oil prices eased back from record highs.
Drug major AstraZeneca reported a better-than-feared 14% fall in third quarter pre-tax profit, but the shares slipped on worries about a generic threat to cholesterol treatment Crestor.
Medical devices firm Smith & Nephew tumbled as it saw profits hit by legal and acquisition costs, although it said its revenue outlook continues to be favourable.
British American Tobacco rose after it posted a 19% increase in operating profits to £2.304bn for the nine month to end September, but said it expects slower fourth-quarter growth. Imperial Tobacco is firmer in sympathy.
Chemicals firm ICI has edged higher. Earlier, it announced third quarter results and said fourth quarter and the year are forecast to be ahead of expectations. Pre-tax profit for the third quarter rose 18% to £177m on sales that were slightly higher at £1,265m against £1,244m before.
Kingfisher has relinquished its earlier rise. This morning it announced that its chief executive Gerry Murphy will stand down on 2 February, the end of the current financial year. The DIY retailer said it is looking for a successor inside and outside the group.
Bus and rail operator Stagecoach is predicting better than expected full year profits after confirming that its good performance continued throughout the six months to 31 October.
Miner Randgold Resources is going well after it said it increased production and contained costs in the third quarter despite operational and weather-related challenges at its Loulo mine in Mali.
Among the small caps, shares in digital ad specialist Independent Media pushed ahead as it predicted results this year will come in well ahead of market expectations, with 2008 also expected to be very strong.
Troubled property services firm Erinaceous has found an interim chief executive but warned that its full year results would be significantly below earlier expectations.
Aircraft components group Umeco announced a "significant" extension to its long term supply chain contract with Rolls Royce.
FTSE 100 - Risers
Unilever (ULVR) 1,696.00p +4.37%
British Sky Broadcasting Group (BSY) 690.00p +1.40%
ICAP (IAP) 591.00p +1.03%
Associated British Foods (ABF) 921.00p +0.99%
Tesco (TSCO) 491.00p +0.61%
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Imperial Chemical Industries (ICI) 662.00p +0.46%
FTSE 100 - Fallers
Northern Rock (NRK) 172.00p -6.78%
Barclays (BARC) 571.50p -5.38%
Smith & Nephew (SN.) 617.50p -4.93%
Alliance & Leicester (AL.) 752.00p -4.87%
Anglo American (AAL) 3,170.00p -4.35%
Old Mutual (OML) 176.20p -4.24%
FTSE 250 - Risers
Dimension Data Holdings (DDT) 66.00p +6.02%
Autonomy Corporation (AU.) 1,038.00p +5.65%
Amlin (AML) 331.00p +3.12%
Randgold Resources (RRS) 1,772.00p +3.08%
SThree (STHR) 255.00p +2.82%
Enodis (ENO) 215.00p +2.75%
FTSE 250 - Fallers
New Star Asset Management Group (NSAM) 329.25p -7.25%
Collins Stewart (CLST) 199.50p -6.56%
Rank Group (RNK) 97.00p -5.37%
Croda International (CRDA) 634.00p -4.95%
Benfield Group (BFD) 288.75p -4.94%
PartyGaming (PRTY) 29.75p -4.80%
