Market Report: Blue chips bank on financials to stay in black

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The Independent Online

Aren't the banks just marvellous? Barclays' eagle was perched on top of the index of leading shares for a second consecutive day after announcing even better results than a number of analysts had predicted.

The £11.6bn profits, helped largely by Barclays' investment banking arm Barclays Capital, led to an 18.7p jump in the shares to 293.75p.

But it was not just the newly enriched bankers who were popping the champagne corks yesterday after Barclays promised bonuses of an average of £95,000 for those at Barcap, as the figures also encouraged a number of financial stocks to the summit of the FTSE 100.

Indeed, the banks gave the index of leading shares the push it needed to finish in positive territory for a second day on the bounce. A number of analysts said the new-found confidence was a direct result of Barclays' impressive numbers: "Finally we have broken out of the constricted ranges of recent sessions as the markets decide this morning that the future is not as grim as many might be forecasting," said the analysts at Capital Spreads. "The FTSE 100 has risen above the 5180/5200 resistance range and is powering ahead towards the middle-5200's. This represents its highest price for several weeks but, more importantly, seems to have moved us away from the bearish phase that has been dominating since the first week in January.

"The trigger for the move seems to have been better-than-expected numbers out of Barclays, who have once again defied expectations with substantially better-than-forecast results; this, coupled with the EU attempting to play hardball with Greece (and by association Spain, Portugal and Italy as well), has given a much-needed boost to investor morale."

Banks dominated the FTSE 100, pushing the index up 76.59 points to 5244.06. The taxpayer also had a good day as Lloyds Banking Group, in which the state has a 43 per cent stake, and Royal Bank of Scotland, in which we all have an 84 per cent holding, took the top four positions behind Barclays. Investors will be hoping that the momentum can be maintained throughout the banks' reporting season. Lloyds, which closed up 2.2p at 49p yesterday, reports on 26 February, while RBS, up 1.66p to 33.26p, reports a day earlier, next Thursday.

Man Group, the hedge fund, was also up yesterday, putting on 8.3p to close at 227.8p. The stock appears to have steadied after losing a quarter of its value in the past month over concerns about what policymakers here, in the European Union and in the US might do to rein in the hedge-fund industry.

Imperial Tobacco continued its poor form of recent days. The market has had a downer on the shares over the past week, despite the makers of Gauloises Blondes cigarettes saying it would challenge the Government's decision in the courts to outlaw cigarette machines. Yesterday, Imperial's shares were hit, to the tune of 35p, by analysts at Nomura, who downgraded the shares to "hold" from "buy". The stock closed the day at 2004p.

In the second tier, Petropavlosk, or Peter Hambro Mining for those who struggle with the group's new Russian name, edged up 79.5p to 953.5p. The shares have sagged a little in recent weeks as gold prices have come off their $1200-plus (£760-plus) highs. Investors have clearly felt the selling has been a little strong, especially as the gold price has inched up again in recent days.

There was considerably less cheer for Imagination Technologies, which was rooted firmly to the bottom of the FTSE 250, putting in a second poor performance in as many days. There is clearly disquiet in the market after electronics giant Samsung penned a deal with rival ARM. The shares closed the day down 9.6p at 243.4p.

Sepura, a supplier of digital radios, was the best performer among the small-caps after its stock put on 9.5p, rising to 53.5p. There have been rumours that a buyer had been looking for around 200,000 shares, which he now appears to have secured.

Conversely, Apace Media, which calls itself a "group specialising in international content creation and broadcasting," lost half its value yesterday, after proposing to remove itself from Aim, because, it says, the market does not fairly value the company.