Traders were predicting storms ahead for Barclays, after an already troubled week for the UK bank. As the stock slumped lower in the afternoon, one said: "Something is up. Every time the stock tries to rally it gets spanked, and the market is rarely wrong in a blue chip like this."
There are several catalysts for the drop, but yesterday it was hit by problems in its investment banking division, Barclay Capital. Two structured investment vehicles that BarCap helped put together have collapsed, and there was talk last night of its CDO chief resigning. The shares had survived its "outing" as the anonymous borrower from the Bank of England's emergency fund on Wednesday, but they closed down 5.5p at 627.5p yesterday.
Elsewhere in the banking sector, perennial gossips' favourite Northern Rock was up again as the rumour mill kept turning. The Newcastle-based lender was top of the leaderboard for much of the day, closing up 29p at 757.
The latest rise was sparked by rumours that ING was a potential suitor, although that was quickly denied by the bank. With Northern's share price well off the year's peak, expect more of the same chat in the coming weeks.
The market stormed up again for the third day in a row, as sentiment continued to be buoyant. The FTSE 100 was 91 points higher in early-morning trading. It didn't hold, as fragile confidence in the US dragged it down to end the day almost flat at 6196.9 points.
It had been another good performance from the miners, until the afternoon slump saw investors rushing to lock in profits at the quality stocks. Rio Tinto had hauled the sector up after it succeeded in raising the $40bn loan needed to finance the takeover of Alcan. It rose 115p as it shrugged off the credit market turmoil to land the financing, but slumped to close down 18p at 3262p.
There was some idle talk that Rio's loan could see BHP Billiton almost copy it but target Alcoa instead. The giant miner rose 51p, but closed 10p lower at 1355p, as analysts were quick to pour cold water on the idea.
The real-estate investment trusts and housebuilders also took a pounding off the back of profit-taking, with Hammerson the worst performer of the day. It shed 2.45 per cent to close 1275p. Segro wasn't far behind, down 2.4 per cent at 529p.
On the second line, Electra Private Equity was buoyant off the back of a refinancing deal for Allflex Holdings II. The deal, which was led by Royal Bank of Scotland, will see Electra bag cash proceeds of $78.2m as well as hold interests worth $114m in the new company. Electra led the buyout of Allflex, which makes animal identification tags, in 1998, and has refinanced it several times. The group said it will pocket five times its original investment. The stock finished top of the FTSE 250, up 7.21 per cent at 1,651p.
A revolt among minority shareholders of F&C Asset Management sent the shares up 2p to 200.5p. They demanded that management consider alternatives to its merger with Resolution Asset Management. The deal is part of Resolution's proposed tie-up with Friends Provident, which holds a 52 per cent stake in F&C. Two investment banks have reportedly approached possible buyers for F&C, which could be sold for up to £1bn.
Separately, F&C Commercial Property Trust has called an EGM next month. The move was forced after it traded at a discount to its net asset value for 90 continuous days. The vote could result in winding up the company, although the manager doesn't expect that. Possibly because the board owns over half the stock of the company, according to one trader. F&C's shares were overcooked in the morning. Market makers sold into it as punters bought the stock on the back of yesterday morning's headlines. It closed down 0.25p at 127.75p.
Top of the AIM stocks was the oil and gas group Wham Energy, after it accepted a £14.2m takeover bid from Venture Production. The value soared by 57 per cent to close at 42.5p after the cash and shares deal was announced. Venture closed down 1p at 740.5p.
Also up was Sarantel Group, which secured two contract wins for its antenna technology. The company, which makes filtering antennas for mobile and tracking devices, won contracts with the Falcom Mambo II mobile phone and a Teltonika GPS tracker. The news sent the shares soaring 46 per cent to 9.5p.Reuse content