FRIDAY MARKET CLOSE: RBS leaps 11% on surprise profits call

Royal Bank of Scotland’s sterling solo effort failed to propel the FTSE peloton higher yesterday as traders opted for caution ahead of the weekend.

Shares leapt almost 11 per cent after the state-backed lender rushed its headline figures out early and smashed expectations with a near doubling in half-year profits.

Richard Hunter, head of equities at Hargreaves Lansdown, said: “In stark contrast to its recent history, RBS has shocked the market positively.

“The tailwinds provided by improving economic conditions in both the UK and Ireland were largely responsible, whilst elsewhere within the numbers the group reported that all customer-facing businesses had improved operating profits.”

RBS added £2.3 billion in value as its shares climbed 35.4p to 364.2p. Barclays added 3.6p to 218.1p and Lloyds Banking Group rose 0.8p to 74.8p ahead of the pair’s own half-year figures next week.

Other highlights of a busy session included a major takeover deal by BSkyB and talks over the potential combination of Carillion and Balfour Beatty.

BSkyB dropped more than 5 per cent or 50.5p to 874.5p as investors balked at the price tag on its deal with 21st Century Fox to buy all of Sky Italia and take a majority stake in Sky Deutschland.

Shares in Balfour Beatty and Carillion jumped by as much as 9 per cent after the construction firms confirmed talks over a potential merger.

Balfour rose 21p to 253.1p and Carillion lifted 24.3p to 362.8p, valuing the two companies at a combined £3.3bn and meaning any tie-up would create a company large enough to go into the FTSE 100 Index.

The index itself was down 29.91 points at 6,791.55 as weak German data put European markets on the back foot.