Global debt woes take toll on banks

SHARES in Lloyds Banking Group and Royal Bank of Scotland hit fresh 52-week lows yesterday, as America and Europe’s debt woes continued to take their toll on financials stocks.

RBS was the worst performer on the FTSE 100 index, down 5.8 per cent or 1.14p at 18.42p, with Lloyds not far behind with a 4.4 per cent or 1.03p drop to 22.39p.

The pair weren’t helped by a flurry of Stock Exchange announcements on Monday, when it was revealed that Nathan Bostock would not be leaving RBS to join Lloyds as had been planned.

The wider Footsie closed down 0.3 per cent at 5,206.82 having hit a high of 5,281.95 before retreating after data from the United States showed that growth in the world’s biggest economy slowed from 2.5 per cent to 2 per cent in the three months to 30 September.

Chris Beauchamp, market analyst at IG Index, said: “After Monday’s heavy sell-off, investors could have been forgiven for hoping for some appreciable gains. They were sorely disappointed though, as the two problems that plagued markets on Monday – the eurozone and US debt sagas, were joined by a third – a slowing US economy.”

The pound was up against the euro at €1.16 after the single currency was hit by further concerns about the borrowing costs of some of its debt-ridden members and fresh speculation that France will suffer a credit ratings downgrade. Sterling was flat against the dollar at $1.56.

The biggest faller in the FTSE all-share index was Thomas Cook after the travel agent admitted it had returned to its banks for more financial help.

Investors were spooked by its need for an additional £100 million in funding headroom over December and January – just a month after a similar request to banks. Shares slumped 75 per cent, or 30.91p to 10.2p, having lost 90 per cent of their value since the start of the year following a series of profit warnings.

Rival operator TUI Travel was also hit, with its shares down by 9 per cent or 13.9p at 136.7p, while British Airways owner International Consolidated Airlines was 7.2p lower at 132p.

Elsewhere, Mitchells & Butlers shares edged downwards after the owner of the Three Crows pub in Glasgow and Edinburgh’s Last Drop posted a fall in profits. Underlying earnings were down 7.7 per cent to £156m in the year to September, while 2 per cent like-for-like sales growth in the eight weeks since then compared to 2.6 per cent during the previous year. Shares were 0.8p lower at 216p.

Pizza delivery firm Domino’s revealed that it had snapped up nearly £4m-worth of its shares on Monday at 394.5p each, pushing its share price up 1.1 per cent or 4.5p to 403p.

Among the Scottish stocks, Edinburgh-based dating website operator Cupid dipped 2p or 1.1 per cent to 181p despite the company’s pre-close trading update trumpeting that profits would be “substantially” ahead of last year. Analysts said a big rise was already priced into the stock.

Optos, the Dunfermline-based eye-scanner maker, suffered profit taking – dropping 9.4 per cent or 21.25p to 204.5p – after it posted a 73 per cent rise in full-year pre-tax profits. The firm has now used up all its tax allowances from previous years’ losses and so will swell the Treasury’s coffers this year.