Market Report: Fears of skeletons in the results spook RBS

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The Independent Online

Royal Bank of Scotland is due to publish its full-year results next week, and some in the market, unmoved by a bullish show from Barclays, remain concerned about the prospect of fresh skeletons from the financial sector.

The anxiety was especially evident yesterday, when early-morning murmurs suggested RBS was preparing to unveil new losses, borne of an unsuccessful punt in the forex market.

While the rumour was soon questioned by investors and traders alike, RBS shares suffered an early fall to 348.25p, 12.75p behind their closing point on Monday. By mid-afternoon, suspicions regarding the speculation had hardened into firm dismissals, and RBS shares recovered to close up 5.75p at 366.75p.

The RBS recovery was aided by Barclays, which also helped boost others in the sector. These included Lloyds TSB, which gained 1.77 per cent or 7.5p to 432p, and HBOS, which gained 3.13 per cent or 20p to 659p. Barclays ended the day at 477p, up 3.7 per cent or 17p.

Elsewhere, shares in J Sainsbury fell 0.26 per cent to 381.5p after some talk of trading by Robert Tchenguiz, the property tycoon, who, it was speculated, was raising funds to increase his stake in Mitchells & Butlers, which climbed by 0.9 per cent to 449p.

Overall, the FTSE 100 closed up 20.3 at 5,966.9. In addition to support from the banking sector, the index was helped by early gains on Wall Street, where investors were glad to note a modest increase in profits at Wal-Mart, the retail giant which owns the UK's Asda supermarket chain.

The FTSE 250 was also up yesterday, climbing 124.6 to 10,208.6.

Mining stocks were boosted to the top of the leader board yet again. Firmer prices for copper, gold and platinum, which climbed to another record yesterday, helped to drive the gains.

Antofagasta was the second best performing stock on the benchmark index, gaining 5.22 per cent or 41p to 826p.

Others in the sector to gain included Kazakhmys, which rose by 3.65 per cent or 51p to 1,448p, Rio Tinto, which climbed 2.17 per cent or 124p to 5,850p, and BHP Billiton, which gained 2.35 per cent or 38p to 1,656p.

Vedanta Resources was also up, boosted by the general trend and by Lehman Brothers, which revised its target price for the company's stock to 2,150p from 2,100p. The company's shares closed at 2,183p, up 3p.

Benign broker sentiment also helped Tullow Oil and Cairn Energy, both of whom were highlighted in a new Morgan Stanley note.

Analysts at the bank said that the two were their "top picks" in the oil/gas exploration and production sub-sector, which they think "should outperform ... wider equity markets".

The news helped Tullow's stock gain 1.5p to 615.5p, while Cairn Energy saw its share price climb 68p to 2,584p.

On the FTSE 250, the commodities boom helped take Aquarius Platinum to fourth place on the leader board, up 5.87 per cent to 794p.

Ladbrokes, the betting and gambling company which was buoyed by mystery stake-building last week, was less successful yesterday.

Investors had been pegging their hopes on a prospective takeover approach, and Apax, the private equity group which has been in the frame to bid for the company before, was touted as the most likely suitor. However yesterday, new reports suggested that the Bahamas-based billionaire Joe Lewis, not Apax, was behind the stake-building. The revelation quashed investor's hopes and the company's stock ended down 0.46 per cent at 326p.

Among the small caps, shares in Portland Gas rose after the company issued a positive update on its Portland project in Dorset. Analysts at Seymour Pierce reacted to the news by reiterating their "buy" recommendation for the stock, which rose 4.73 per cent or 13.5p to 299p.

The software developer Mediasurface and the specialist materials marker Low & Bonar continued to rally after posting positive results on Monday. Low & Bonar climbed 12.41 per cent or 12.25p to 111p, while Mediasurface gained 7.5 per cent or 0.375p to 5.375p.

On AIM, the IT security and outsourcing services company Netstore gained a spectacular 30.56 per cent or 5.5p to 23.5p after confirming early stage approaches which may lead to an offer for the company.

Polymer Logistics, on the other hand, plummeted 42.74 per cent or 26.5p to 35.5p after issuing a full-year profits warning.

Finally, Terrace Hill, the AIM-listed property group, gained 3.85 per cent or 2p to 54p after saying that it was in a strong cash position, bucking the downward trend in the UK real estate market.

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