Footsie weighed down by the banks

BANKING stocks came under pressure in London yesterday as poor corporate results in the United States added to the continuing gloom from the eurozone debt crisis.

Royal Bank of Scotland dropped 0.5p at 21.9p and Lloyds Banking Group was off 0.5p at 28.4p.

Barclays was 4.9p lower at 174.1p after analysts at Goldman Sachs cut their rating on the stock to “sell” from “neutral” on expectations it would be dealt the biggest blow by reforms from the Independent Commission on Banking (ICB).

Goldman said that, while the ICB estimated the annual pre-tax costs of reform for UK banks at £4-7 billion, it predicted all-in costs of £10bn.

The broader FTSE 100 index closed 26.34 points, or 0.5 per cent, lower at 5,519.04 amid thin trading volumes of just 71 per cent of its 90-day daily average.

Yusuf Heusen, a sales trader at IG Index, said: “We have seen a much quieter session than we have been used to of late, with the FTSE drifting lower after an initial early gain.”

Weak eurozone production figures and wider concerns about the impact of the debt crisis on the global economy hit the mining sector with Vedanta Resources falling 2 per cent or 42p to 1,120p and Kazakhmys losing 20p at 911.5p.

Broadcaster ITV topped the FTSE 100 index after its advertising revenues improved by 1 per cent in the three months to 30 September, defying expectations for a fall.

While the group remains cautious about its prospects in 2012, particularly with advertising revenues due to decline by 10 per cent in December, shares rallied 3 per cent or 2.1p to 66.8p.

Luxury goods group Burberry, ahead of first-half results today, took second place on the risers’ list, up 3.2 per cent or 44p to 1,421p.

A broker upgrade helped lift medical products company Smith & Nephew by 2.6 per cent or 14.2p to 572.5p. Exane BNP Paribas switched its rating on the stock to “outperform” from “neutral”.

Meanwhile, Majestic Wine shares were 4 per cent lower after a 20 per cent jump in half-year profits was overshadowed by a less sparkling sales performance in the period since the end of September.

The firm said like-for-like sales were down 1.1 per cent after two weeks of disappointing sales amid the economic turbulence in mid-October. Shares fell 16p to 400p.

The UK’s biggest fresh milk supplier – East Kilbride-based Robert Wiseman Dairies – fell 0.5p to 280.5p after the company revealed a 42 per cent slump in pre-tax profits in the six months to October.

Among the other Scottish stocks, Stirlingshire-based Pinnacle Telecom jumped 12 per cent or 0.04p to 0.38p after the firm signed a contract with French IT giant Atos, which is expected to boost its work for the BBC alone by 50 per cent.

Wall Street was also lower as the London market closed as a weak set of corporate results from companies including retailer JC Penney added to the gloom in Europe.

The pound fell to $1.58 against the dollar, which was bolstered by its position as a safe haven currency. Sterling also fell against the euro at €1.16.