Markets

Weak commodities drag top flight back from two-month high

Barclays Bank and Royal Bank of Scotland are among seven banks that have been hit with total fines of around CHF99 million ( 78 million) for interest rate rigging after a four-year probe PICTURE: PA
Ben Woods

LONDON'S top flight slipped back into the red after weakening commodity stocks dragged the market back from a two-month high.

The FTSE 100 Index closed down 2.54 points at 7041.42, with oil major Royal Dutch Shell B and mining giant Glencore slipping 6.5p to 2,323p and 1p to 271.65p respectively.

The London market had continued the rally from Tuesday's session, hitting its highest level since October – at 7056.98 – before paring gains.

Banking stocks remained in positive territory despite British lenders Royal Bank of Scotland (RBS) and Barclays sitting among a group of seven banks slapped with total fines of around CHF99 million (£78 million) after a four-year probe into interest rate rigging.

The Swiss Competition Commission, known as Comco, said a raft of banks ran cartels to influence rates dating as far back as 2005.

As well as RBS and Barclays, Comco also fined US investment banking giants JP Morgan Chase & Co and Citigroup, German group Deutsche Bank, French player Societe Generale and Swiss bank Credit Suisse.

Shares in RBS were up 2.1p to 228.4p, while Barclays rose 1.1p to 228.8p.

Across Europe, Germany's Dax was flat and the Cac 40 in France edged 0.3 per cent lower.

Investors breathed a sigh of relief after Italian lawmakers approved a €20 billion (£16.9bn) rescue plan for some of the country's weakest banks, including struggling lender Banca Monte dei Paschi di Siena (BMPS).

Shares in the world's oldest bank trimmed losses following the news and were down 8 per cent by the afternoon.

BMPS shares had fallen 17 per cent earlier in the day after warning that it could run out of cash within four months if it failed to secure fresh capital.

On the currency markets, the pound extended its losses after official data showed the government borrowed a higher-than-expected amount in November.

In its first update on the UK public finances since the Autumn Statement, the Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, fell by £0.6bn to £12.6bn last month in contrast to November 2015.

Economists were pencilling in a figure of £11.6bn.

It came as government borrowing, excluding banks, for the financial year to date – April to November – fell by £7.7bn to £59.5bn, compared with the same eight months in 2015.

The pound was down 0.1 per cent against the US dollar at 1.23, while sterling was 0.5 per cent lower versus the euro at 1.184.

In UK stocks, shares in defence outsourcing firm QinetiQ soared more than 4 per cent after snapping up Meggitt's defence target systems business for £57.5m.

QinetiQ, which has its headquarters in Farnborough, Hampshire, said it will add the operation to its new international division.

It expects the division to deliver earnings of around £5.5m on revenues of £28m this year.

Shares in QinetiQ rose 10.9p to 259.5p, while Meggitt dropped 4.8p to 467.2p.

The biggest risers on the FTSE 100 Index were Ashtead Group up 21p to 1,581p, Rolls-Royce Holdings up 9p to 685p, Coca-Cola HBC up 21p to 1,684p, Antofagasta up 7.5p to 674.5p.

The biggest fallers on the FTSE 100 Index were Hargreaves Lansdown down 37p to 1,206p, Hikma Pharmaceuticals down 25p to 1,794p, Merlin Entertainments down 5.5p to 437.5p, TUI down 14p to 1,115p.

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