Market Report: Barclays and HSBC report mixed fortunes

It was a tale of two banks for the blue chips yesterday as Barclays and HSBC issued updates – but one was far, far better than the other, and had dramatic results on the market.

Barclays ended up at the bottom of the index after it said its profits for the first nine months of the year had fallen by almost a fifth to £4.5bn following a rise in impairment charges. Its investment banking and asset management profits also suffered. Barclays' shares fell 17.5p, or 5.1 per cent, to 325.35p.

At the other end, HSBC did not disclose any numbers but said its third-quarter profits were up sharply on a year ago, its investment banking business was storming ahead and losses on US consumer loans had fallen for the first time in three years. Its shares rose 27.8p, or4.02 per cent, to 720p.

HSBC's chief executive Michael Geoghegan believes the "biggest jolt has now passed through the global economy". David Jones, chief market strategist at IG Index, said: "After seeing such strong gains since the March lows, the likes of Barclays and RBS seem to have lost the interest of the market in recent months. Today's figures look likely to continue steering investors towards the perceived safe pair of hands that is HSBC, if they really want exposure to banks."

The miners slammed into reversed after a strong session at the start of the week, as commodity prices failed to hold. Kazakhmys was the highest riser on Monday but was the fourth-worst yesterday as it fell 34p to 1252p.

It was overtaken by Randgold Resources, whose third-quarter profit disappointed investors. Its shares fell 202p to 4577p after it said costs had risen by 17 per cent and profits were less than expected. In response, Numis lowered its rating on Randgold's stock from "reduce" to "sell".

Investors also checked out of Intercontinental Hotels after the company, which owns the Holiday Inn and Crowne Plaza chains, said trading remained challenging and its third-quarter revenues had fallen from $496m to $401m. The board said there was considerable pressure on occupancy rates despite signs of stabilisation and it was too early to forecast a recovery. The group's shares gave up 17.5p and closed at 825p.

Also suffering from an update was the telecoms group Vodafone, whose results were in line with expectations. Some analysts believe it has tougher-than-expected competition in emerging markets such as India. Vodafone also said it would double its cost-cutting programme to £2bn by 2012, which spooked some analysts about its growth prospects. Saeed Baradar, of Société Générale, was particularly aggressive, saying Vodafone was "an ex-growth company struggling to maintain margins with unachievable cost cuts". Despite announcing a 2.4 per cent rise in operating profit to £5.9bn, Vodafone's shares plummeted early on but staged a slight recovery, closing down 2p at 135.95p.

The FTSE 100 hovered uncertainly in positive territory in the morning, but retreated to close down 4.63 points at 5,230.55. Some traders believe the index could near the 5,000 mark again, believing the rally has run out of steam.

The second-strongest riser was Imperial Tobacco, whose operating profits rose 10 per cent in the second half as smokers rushed to puff on its cheaper brands, growth continued in emerging markets and it cut costs. Imperial also said its chief executive Gareth Davis would step down next May to be replaced by chief operating officer Alison Cooper. The shares rose as the chief executive-designate issued a rallying cry, saying that after coping with the downturn, her emphasis would be "on growing sales with our strong global position". IT rose 42p to 1870p.

A note from UBS lifted Centrica as the Swiss broker added the stock to its "European key calls list". Analyst Nick Nelson said Centrica had less earnings volatility, a strong balance sheet position and "plenty of scope to yield further growth through tighter capital management and cost-cutting". UBS removed E.On from the list, saying Centrica had "better visibility". The news sent the shares up 3.8p to 245.5p.

It was a similar story of movement driven by updates on the second tier. The top riser was Morgan Sindall, the construction group, which rose 54.4p to 605p as it confirmed it would hit expectations this year, and said its £3.4bn order book would be bolstered by £900m of projects which were at the preferred bidder stage.

After a very short-lived rally by Punch Taverns last week, the pubs operator plunged to the bottom of the second tier as the market bought the bear case for the stock. The company's shares closed down 5.8p on 87.7p.

Another faller on the FTSE 250, was Babcock International. The engineering specialist's shares slumped despite lifting profits by 30 per cent in the first half. Analysts at Investec attributed the 22.5p fall in the stock, to 619.5p, to profit-taking.

The sexual health specialist Futura Medical fell 13.8 per cent to 37.25p after it announced delays to its lead product. The group was supposed to be developing a condom for Durex but is still awaiting regulatory approval.

On the plus side, software group Kewill Systems plans a £7.5m raising to strengthen its balance sheet and look at acquisitions. It rose 6.5p to 99p.