Market Report: Lloyds support comes from an unlikely ally

It was a rare chance for bosses at Lloyds Banking Group to break out the champers yesterday after analysts made a rare "buy" recommendation on the stock. Surprisingly the support came from RBS, perhaps signalling the part-nationalised banks are keen to stick together in these troubled times. Ian Smillie, analyst at RBS, said Lloyds offers a "compelling restructuring opportunity" and more than doubled his price target from 60p to 150p. "Margin expansion, cost control and normalising bad debts are key to a rise in return on funded assets to 1.1 per cent," he added. Lloyds rose 2 per cent to close at 98.72p.

Others in the sector were not so lucky as KPMG predicted banks' retail arms would plunge to a loss in the second half, blaming bad loans and tough competition. Worst hit was HSBC, tumbling from a combination of KPMG, going ex-dividend, and profit-taking after previous day support from Goldman Sachs. It closed down 1.9 per cent at 643p.

Pharma giant Shire has had a cracking run in recent months, outperforming its healthcare peers by some 21 per cent. The market decided enough was enough yesterday as JP Morgan downgraded it to "neutral" . The broker said that "much of the potential near-term upside is now priced into Shire's current valuation", sending it spiralling down 2.5 per cent to 1,011p.

Shares in the drinks cans and packaging maker Rexam tumbled 10 per cent in July when it announced a heavily discounted rights issue. The group, looking to tackle its £2.7bn debt pile, announced yesterday more than 95 per cent of shareholders had picked up their rights to new shares at 253p a piece. The shares drifted closer to that, down 2 per cent at 253.9p.

Richard Burrows was not given the warm welcome he might have hoped as he was named chairman of British American Tobacco. The former Bank of Ireland chairman replaces Jan du Plessis, who leaves for Rio Tinto in November. The shares fell 1.74 per cent to 1,867p, maybe because Mr Burrows is a non-smoker, or maybe because the stock also went ex-dividend.

The FTSE 100 fell in the morning with one expert saying the markets were "generally looking a tad dodgy after the attempt to rally on Monday's falls" had petered out.

Simon Denham, the head of Capital Spreads said: "There is a sense that we are waiting for some confirmation that either we are pulling out of the mire, or that the weight of debt and poor confidence will drag us back in."

The index had been brought low by selling in China, combining with "concerns that equity markets are simply looking overbought as the summer draws to a close," according to Anthony Grech, a market strategist at IG Index.

The blue chips bounced off the session lows, with help from a rally on Wall Street closing up 3.89 points at 4,689.67. Top of that pile was Eurasian Natural Resources Corporation (ENRC), the word's largest producer of ferrochrome.

ENRC looked strong as it charged up 6.24 per cent to 825.5p. The lift came from better-than-expected results, and bullish recovery talk from boss Johannes Sittard, who added it was well positioned for the opportunities in China.

Serco Group was helped by Evolution Securities weighing in with a "buy" rating as it started coverage on the UK support sector. The group that operates London's Docklands Light Rail and, according to its website, pursues "continuous improvement relentlessly" rose 2.41 per cent to 438p. Evos says it should hit 500p as it has a "strong organic growth outlook".

On the day of the heatwave, the sun was shining on PV Crystalox Solar, which stormed up to second place on the second tier. The group makes multicrystalline silicon ingots and wafers, not a revolutionary new dish from the Fat Duck restaurant, but a core component in solar power systems. PV posted better than expected sales in the first half and is confident for the second, surprising after a string of poor results from European and US rivals. It closed up 3.6 per cent at 85.95p.

An interim management statement at Vectura lifted investor spirits early on. The pharma stock said it had £70m in cash and was confident over its prospects. It reversed late on, falling 1.22 per cent to 81p.

Hotel company Millennium & Copthorne has enjoyed a cracking month, bouncing 26 per cent since mid July, but investors called a halt to the optimism yesterday sending the stock crashing down 4.3 per cent to 308p.

The building group Wolseley was also on shaky foundations after Nomura downgraded the building materials sector, and the company itself saying it had limited earnings capability. The stock closed down 1.7 per cent to 1,385p.

In the wider market, Hampson Industries was the worst performer after a disappointing update said that trading remained difficult. The move prompted Brewin Dolphin to slash its rating to "sell" from "hold" as the shares dived 9.76 per cent to 74p.

Yell Group enjoyed huge support, and while there was little in the way of news, market-makers said a huge amount of retail investor support had driven it higher. The directories company finished up 16 per cent at 36.69p.

PROMOTED VIDEO
Arts and Entertainment
Jake Quickenden and Edwina Currie are joining the I'm A Celebrity...Get Me Out Of Here! camp
tv
News
i100
Life and Style
fashion
News
videoJapanese prepare for the afterlife by testing out coffins
Arts and Entertainment
Harrison Ford attends Blade Runner at Target Presents AFI's Night at the Movies at ArcLight Cinemas on 24 April, 2013 in Hollywood, California
film... but Ridley Scott won't direct
Sport
Hughes is hit by a bouncer from Sean Abbott
cricketStephen Brenkley on batsman's tragic flaw that led to critical injury
Sport
Dejected England players applaud the fans following their team's 3-0 defeat
football

News
people

Actress isn't a fan of Ed Miliband

News
ebooksNow available in paperback
News
The Bounceway, designed by Architecture for Humanity
newsLondon to add 'The Bounceway' to commuting options
Life and Style
Stefan Gates with some mince flies
food + drink
Arts and Entertainment
Rooney Mara plays a white Tiger Lily in forthcoming film Pan
filmFirst look at Rooney Mara in Pan
Life and Style
Customers browse through Vinyl Junkies record shop in Berwick Street, Soho, London
tech
Life and Style
health

Do you qualify – and how do you get it?

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

h2 Recruit Ltd: Business Development Manager - HRO - £70k+ ote

£35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...

Citifocus Ltd: Newly Qualified Accountants - Risk Mgmt

£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...

Citifocus Ltd: Operational Risk Analyst

£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...

h2 Recruit Ltd: Business Development - Telecommunications - £50,000 OTE

£25000 per annum + £50,000 OTE: h2 Recruit Ltd: London, Reading , Southend, Al...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital