Market Report: Effect of eurozone deal short-lived for UK banks

As rallies go, the banks' didn't exactly last long.

Just one day after rising on hopes that the eurozone agreement might help sort out the region's sovereign debt crisis, Lloyds Banking Group, Royal Bank of Scotland and Barclays found themselves back in the shadows of their Asia-focused peers last night.

All three failed to extend Thursday's gains, with Lloyds and RBS the worst-hit – sliding 1.92p to 35.15p and 0.98p to 26.29p, respectively. Despite optimism that the deal struck in Brussels would spark a recovery in the two part-state-owned banks, JP Morgan Cazenove refused to lend its support, keeping its "underweight" rating for both.

The broker's analyst Raul Sinha was particularly cautious on the forbearance – where lenders help out borrowers at risk of default by easing their terms – shown by the banks. Saying that asset quality risks in the UK were being "underestimated" as a result, he warned that in the event of a downturn it could become"a £20bn plus issue for the sector".

Instead, Mr Sinha chose Standard Chartered and HSBC as his top two picks among the UK-listed banks, claiming that the asset quality risk across Asia was much lower. They climbed 8p to 1,523p and 10p to 565.3p, respectively, in response.

Mr Sinha also upgraded his rating for Barclays to "overweight", but this did not stop it being pegged back 8.8p to 201.2p, amid some caution ahead of the group kicking off the banks' reporting season on Monday

The increasing number of questions being asked about the debt crisis agreement only intensified after Italy's cost of borrowing soared, leaving the FTSE 100 unable to push on from Thursday's huge jump of nearly three per cent.

However, despite creeping back 11.58 points to 5,702.24, the top-tier index remains on course for its best month in over two decades, having gained more than 15 per cent since falling below 5,000 points at the start of October.

The fear of further bad news from Man Group knocked the world's biggest listed hedge fund manager back 7.5p to 153.4p. After the company revealed in September that clients had removed $2.6bn (£1.6bn) in cash over the previous three months, Bank of America Merrill Lynch warned that its interim results next week would reveal "significant cuts in ... performance fees", although the broker still kept its "buy" rating.

The prospect of next year's Olympics was exciting analysts at RBS, who predicted that the event would contribute to ITV's advertising increasing by five per cent over 2012. It also claimed that the X Factor broadcaster was "very cheap at these levels", helping it advance 1.3p to 66p.

Hammerson charged up 8.5p to 413.5p after revealing it was receiving €106m from selling part of its stake in the O'Parinor shopping centre near Paris. The property developer said it would put the cash back into future investments.

Drugs giant GlaxoSmithKline edged up 5p to 1,384p, as rumours refused to go away that it could be about to launch a $3.4bn approach for US biotech company Human Genome Sciences, despite analysts having rubbished the vague speculation.

Down on the FTSE 250, Dixons Retail retreated 0.57p to 12.03p amid fears over the electronics retailer's first-half results, which will be released next month. The high street chain was not exactly cheered by figures from GfK that showed consumer confidence dropping to its weakest level since February 2009, when the UK economy was in recession.

Elsewhere in retail, Mothercare slipped back 1p to 179p after Seymour Pierce's Kate Calvert slashed her target price by nearly two-thirds to 176p. The analyst said her own experience as an expectant first-time mum had "reinforced my view that Mothercare has lost its modern day relevance", attacking its "unfashionable range and uncompetitive pricing".

Exillon Energy grabbed pole position on the mid-tier index by spurting up 12.82 per cent to 320.4p. The oil producer's share price has now managed to rise nearly a fifth since it announced a 53 per cent rise in its average daily production earlier in the week.

Hopes that a new bid could be imminent continued to push Alterian up on the small-cap index. The marketing technology group was lifted 10p to 93p in response to vague rumours that it may be about to receive a 100p a share approach, after it rejected an offer recently from mid-tier software maker SDL (up 15p to 655p), worth 80p a pop.

Bagpuss and the Clangers are heading for a new home after Coolabi agreed to be taken over by North Promotions, leaving the alternative investment market-listed media group – which holds the rights to the children's favourites – 11.11 per cent higher at 7.5p.

FTSE 100 Risers

WPP 688p (up 11p, 1.62 per cent)

Even though it cuts its revenue outlook for the year, the world's largest advertising company still advances after promising to improve its margins.

Unilever 2,114p (up 12p, 0.57 per cent)

Persil-owner rises as Liberum Capital highlights positive read-across from fellow consumer goods behemoth Procter & Gamble's recent results.

FTSE 100 Fallers

Aviva 363p (down 12.5p, 3.3 per cent)

Insurer falls back after getting a boost on Thursday from the deal between leaders on the eurozone debt crisis plus the revival of bid speculation.

International Airlines Group 174.6p (down 5.8p, 3.22 per cent)

British Airways-owner hit by UBS cutting its target price to 240p from 260p and reducing its earnings forecasts ahead of next week's update.

FTSE 250 Risers

Elementis 150p (up 9.9p, 7.07 per cent)

Chemicals company jumps after announcing trading for the third-quarter is ahead of the same period the previous year, adding that it is on course to meet expectations.

New World Resources 598p (up 37p, 6.6 per cent)

Czech coal digger continues to climb in the wake of Thursday's trading update, in which it reiterated both its production and sales targets for the full year.

FTSE 250 Fallers

Croda International 1,733p (down 87p, 4.78 per cent)

Chemicals company still falling, meaning it has now lost nearly 9 per cent since releasing its third-quarter trading statement on Thursday.

Inchcape 337.7p (down 1.4p, 0.41 per cent)

Car dealership drops despite Panmure Gordon reiterating its "buy" recommendation following the group's interim management statement earlier in the week.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Company reveals $542m investment in start-up building 'a rocket ship for the mind"

News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

Sport
CSKA Moscow celebrate after equalising with a late penalty
football

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album