News Column

Portuguese bank's rescue steadies market

August 5, 2014


The FTSE 100 Index was little changed as traders studied the rescue of Portugal's troubled lender Banco Espirito Santo with relief.

The group will be lent 4.9 billion euro (pound(s)3.9 billion) from the country's bailout fund, with its assets split into separate good and bad bank operations.

The resolution helped shore up confidence after what was a turbulent few sessions in which political and economic events triggered a correction for world markets.

The FTSE 100 Index edged down 1.7 points at 6677.5, having slumped by as much as 100 points on Friday before US jobs data ensured the top flight finished down by a more respectable 50 points.

The pound held steady against the dollar, at 1.68, and the euro, at 1.25, after data showed UK construction activity beat forecasts last month.

The Portuguese rescue and a solid set of half-year results from HSBC meant that banking stocks were on a firmer footing, with Lloyds Banking Group edging up 0.01p to 73.3p and Royal Bank of Scotland ahead 2.5p at 352.5p.

HSBC was one of the top flight's biggest risers, despite reporting a massive 12% drop in half-year profits to 12.3 billion US dollars (pound(s)7.3 billion) as it counted the cost of weakness in investment banking due to lower trading volumes.

But with the figures broadly in line with expectations and the bank signalling the potential benefit from rising UK and US interest rates over the next few months, shares were 1% or 5.7p higher at 635p.

But Barclays slipped 0.3p to 224p.

The risers board was topped by testing and quality control company Intertek, which offset what was a 3% drop in half-year profits to pound(s)140.9 million by announcing a 6.7% rise in its interim dividend.

The company has been impacted by the strength of the pound but shares rose 6.8% or 173p to 2706p after it said it was well- positioned in long-term growth markets.

Risk-driven stocks were also on the front foot with commodities giant Glencore up 3.6p to 359.8p and Rio Tinto up 6p to 3360.5p.

In corporate news, shares in insurer esure were 1% higher after it posted what was described as a "solid" set of half-year results, with pre-tax profits up 0.4% to pound(s)57.1 million despite the impact of downward pressure on car insurance premiums.

The stock lifted 1.3p to 258.5p, even though it expects gross written premiums in the second half of this year to be lower than the same period last year.

The biggest risers on the FTSE 100 Index were Intertek up 173p at 2706p, Shire up 25p at 4896p, AstraZeneca up 24p at 4362.5p and Travis Perkins up 14p at 1703p.

The biggest fallers on the FTSE 100 Index were Reckitt Benckiser down 65p at 5150p, Whitbread down 47p at 4226p, Weir Group down 36p at 2525p and Carnival down 31p at 2115p.

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Source: Herald, The (Scotland)

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