Footsie slumps despite bank bounce

LONDON FTSE 100 CLOSE 5,553.29 -64.55

A DIFFICULT week for London's FTSE-100 index continued yesterday with another slump into the red as investors gave Barclays the thumbs down and US growth fell short of hopes.

The blue-chip index shed almost 64.6 points to close at 5,553.29 – racking up losses of more than 3 per cent or 200 points over the past four sessions.

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While progress towards a bailout of the beleaguered Greek economy overshadowed trading, shares in Barclays slumped 6 per cent despite first-quarter profits of 1.82 billion, as brokers pondered slowing growth at investment bank Barclays Capital.

Meanwhile, US shares fell in early trading as Goldman Sachs tumbled on reports of a criminal investigation into the Wall Street giant and after first-quarter US gross domestic product came in weaker than expected.

Markets are expected to remain nervous until the European Union and International Monetary Fund agree support to Greece, expected this weekend.

The pound edged higher against the dollar at $1.53 and was flat at 1.15 against the euro as dealing rooms await the outcome of the Greece negotiations before giving their verdict.

Michael Hewson, an analyst at CMC Markets, said: "UK markets have been pretty lacklustre ahead of the long weekend, which is not altogether surprising given what is going on over in Athens and the extent of any austerity measures that would have to be imposed on Greece in return for the aid."

In London, Barclays topped the fallers board – down 23p at 338.25p – after a wary reaction to its first quarter figures.

The banking giant said investment banking revenues fell year-on-year to 3.8 billion from 5.2bn, which overshadowed a 90 per cent leap in underlying group profits.

Part-nationalised rivals Royal Bank of Scotland and Lloyds Banking Group were on the back foot following earlier gains. The pair lost 1.85p to 54.35p and 1.87p to 66.13p respectively.

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Oil firms were also in the spotlight amid the worsening picture around BP's Gulf of Mexico spill. Shares fell a further 1 per cent – or 8.7p to 575.5p – on top of its 6 per cent slide on Thursday as one analyst estimated the cost of the clean-up operation and drilling relief wells could be $845 million (551m).

Meanwhile, rival Shell was going in the other direction, adding 14p to 1,975p.

Advertising giant WPP also rose after its update for the first three months of 2010 revealed its first monthly revenue growth for more than a year.

The firm rose 6.5p to 698.5p as it said profits and operating margins had been "well above" budget and against last year.

Pearson – which owns Penguin books and the Financial Times newspaper – also reported strong first-quarter trading, with a 12 per cent rise in underlying revenues to 1.1bn, helping the shares to edge up 1p to 1,051p.

Pest control and hygiene firm Rentokil Initial, however, fell 5.5p or 4 per cent to 127.4p despite 41 per cent profits growth in the first quarter. Analysts said the shares were due a rest after a strong recent run.

Forth Ports ended the day unchanged at 1,347p after reporting an uplift in container volumes during its annual general meeting in Edinburgh.