RBS boosted by Goldman Sachs upgrade to 'buy'

Market Report

RBS gained 3.4p to 234.6p, although the shares are still down 21% this yea (Rex)

Royal Bank of Scotland – still majority-owned by the taxpayer and still waiting for a profit – got some welcome news courtesy of the US bank that, for many, epitomised the greed that led to the financial crisis.

Goldman Sachs analysts reckon RBS is a better investment than the other bank bailed out by the British taxpayer, Lloyds, and upgraded it to a “buy”. News that nearly 450 investment bankers at RBS will be losing their jobs also led investors to assume the restructuring of the business was taking shape.

RBS gained 3.4p to 234.6p, although the shares are still down 21 per cent this year and way off the 500p at which the Government bought its stake. Lloyds was down 1.04p to 69.27p.

The RBS upgrade was a rare piece of good news for the market as the rays of hope from Monday turned cloudy and the FTSE 100 closed down 34.6 points or 0.56 per cent at 6,139.97.

At the start of the week investors were pleased with the news from the European Central Bank about possible future stimulus. But yesterday the Bank of Japan painted a gloomier economic picture. Sentiment was not helped by reports from China that authorities are considering a transaction tax on foreign exchange trading.

Oil had another weak day, with Brent crude down 2.5 per cent at $38.54 a barrel, and copper prices fell too, adding to the market gloom after a new poll showed Brexit was more likely than not.

And so it was that the usual suspects of the big mining companies dragged the market down. Anglo American fell 59.05p to 487.45p, BHP Billiton 53.4p to 762.8p, Glencore 7.05p to 140.85p, and Rio Tinto lost 80p to 1,921.5p.

Tullow Oil dropped 24p to 192.1p after declaring a force majeure on two cargoes of oil from Ghana.

Insurer Legal & General fell 15.5p to 228.1p as weaker solvency ratios outweighed reasonable results.

Inchcape shares were up 15p to 725p as the international motor dealer revealed a 10 per cent rise in headline profits. Investors shrugged off a near-£50m writedown in the value of its Russian business, where new car sales fell 36 per cent, as profits in other emerging markets soared 40 per cent.