Bank shares continue shaky recovery

Banking stocks continued their recovery to push the London market higher for the fourth session in a row yesterday after efforts by central lenders to boost liquidity helped it gain 3 per cent this week.

The move to pump unlimited amounts of dollars into the banking sector to ease funding pressures, announced on Thursday, continued to boost confidence and helped the benchmark FTSE 100 index close up 0.6 per cent at 5,368.41.

David Jones, chief market strategist at IG Index, said: “The FTSE 100 index briefly flirted with its best levels since the beginning of the month.”

London’s leading share index had been up by more than 1 per cent earlier in the day, and close to the 5,400 mark. But the index remains down 0.5 per cent in September and 9 per cent in the year-to-date.

Barclays added 5.4p to 163.4p, while Royal Bank of Scotland lifted 0.6p to 24.3p and HSBC was ahead 3.7p at 524.8p. But Lloyds Banking Group was down 0.1p to 35.8p after it surrendered earlier gains.

There were hopes a meeting of eurozone finance ministers might yield some decisive action on the sovereign debt crisis.

With the meeting ongoing at the close, traders said few were willing to keep short positions into the weekend in case a significant policy shift was forthcoming.

The pound was up at €1.15 against the euro after the single currency slipped following the boost provided by Thursday’s dollar liquidity announcement. Sterling was also up against the dollar at $1.58.

Elsewhere, the decent week for retail stocks continued after Marks & Spencer lifted 4.2p to 335p and B&Q-owner Kingfisher cheered 2.4p to 253.5p.

The mood in the sector has been helped by resilient results from the likes of Next and Kingfisher, while John Lewis pitched in yesterday with trading figures showing a 5.8 per cent rise in sales for the week to last Saturday. In the FTSE 250 Index, Argos-owner Home Retail Group was up 7.9p at 118.1p.

Microchip designer Arm Holdings fell following disappointing results from Blackberry mobile phone maker Research In Motion. A downgrade from Goldman Sachs also hurt, though the US broker still rates Arm as “one of the most compelling structural growth stories in European technology.” Arm shares dropped 15p to 595p.

On a very quiet day for company news, AstraZeneca’s key new heart drug Brilinta was given the go-ahead by the UK regulator for use by the NHS in England and Wales. Shares in the pharmaceutical giant rose 43p to 2,849p.

Printing group Domino’s slid 62p to 500p after it said sales growth for the 10 months to the end of August had dropped to 4 per cent, compared to 8 per cent at the half year.

Prospective miner Scotgold saw shares rise by 26 per cent after issuing an update on its planning application for the Cononish gold and silver mine near Tyndrum. It said that with the formal consultation period ended, there had been no objection from the Scottish Environmental Protection Agency, while Scottish Natural Heritage had raised only a “technical” objection that could be resolved. Shares were up 0.95p at 4.6p.