Newspaper article The Evening Standard (London, England)

Barclays' Bid to Calm Fears Helps the Banks Rebound

Newspaper article The Evening Standard (London, England)

Barclays' Bid to Calm Fears Helps the Banks Rebound

Article excerpt


THE Barclays share price has fallen nine times in 10 trading sessions, so it was long overdue for a rally. Today, it duly obliged after the bank reassured the City it had no intention of raising extra funds and would exceed the [pounds sterling]5.3 billion of profits earmarked by brokers.

The City liked what it heard and marked banking shares higher. Barclays led the charge with a rise of 28.6p to 79.8p, having slumped to a record low of 51.2p. It was pursued by Lloyds Banking, up 9.8p at 59.1p, and Royal Bank of Scotland, 2.1p ahead at 142p.

But trust between the stock market and the banks is likely to remain a precious commodity, for the time being at least.

The life assurers were also swept higher along with the banks. They depend heavily on the fortunes of the stock market and have suffered from the slump in share values of late.

Aviva rose 32p to 296p, Prudential 221/4p to 3103/4p and Legal & General 4.2p to 59.6p.

This helped lift the FTSE 100 index by 62 points to 4114.5.

The oil sector also provided underpinning for the rest of the market. Petrobus has pledged to spend $28.5 billion ([pounds sterling]20.5 billion) on its massive pre-salt reservoirs just off Brazil. BG Group, up 21p at 939p, has a stake in the project, and should have no trouble funding its share.

Merrill Lynch points out BG has no debt, and its share of the capital expenditure would see gearing rise to only 30%, based on an oil price of $50.

Oil-services group Petrofac jumped 40p to 3911/2p after winning a $2.3 billion contract to help develop an Abu Dhabi oilfield. Evolution Securities says companies that have exposure to the Middle East can still do pretty well despite falling oil prices. Arden Partners says the contract will not only reinforce Petrofac's reputation but also provide the foundation for further potential multibillion-dollar contracts.

Other oil companies ticking better included Tullow, up 43p at 6801/2p, and Royal Dutch Shell, which rose 19p to 1661p ahead of full-year numbers on Thursday.

Record profits in the third quarter are likely to be replaced by the biggest drop in profits for 10 years during the final quarter. …

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