Goldman and euro weigh on the FTSE

Speculation over plans to tackle eurozone debt and disappointing profits from US investment bank Goldman Sachs led to losses on the London market yesterday.

The FTSE 100 Index closed 79.73 points lower at 5,976.70 after Goldman reported a 53 per cent plunge in fourth-quarter profits due to sharp declines in its investment banking arm.

Confidence in the banking sector was shaken further by reports out of Germany that Greece's debt may have to be restructured.

The German government was reported to be considering a plan that would allow its Greek counterpart to retire some of its debt early, using subsidised credits from the EU bailout fund.

Barclays, which has also been troubled by a fine and compensation order totalling 67 million from the Financial Services Authority, dropped more than 3 per cent or 11.6p at 296.1p.

But sentiment was weak across the Footsie financials as HSBC lost 5.2p at 704.1p, Lloyds dropped 1.6p to 66.2p and investment bank Investec eased 12.5p at 513p.

The pound continued to make gains against the dollar, up at $1.59, as sterling continued to feel the effect of Tuesday's high inflation report, but was down against the euro at €1.18.

Financial Times publisher Pearson led gains on the Footsie after it raised guidance for a key profits target in an upbeat trading statement. The group's shares rose 45p to 1,051p, or 4 per cent.

But the focus was largely outside the top flight after the latest flurry of updates.

While bookmakers William Hill and Ladbrokes raced 7 per cent and 2 per cent higher, Comet parent Kesa plummeted and embattled music and book group HMV suffered hefty falls as Christmas trading woes took their toll.

William Hill shares rose 12.3p to 189p as it said the weather conditions that decimated sporting fixtures in the run-up to Christmas may not have been as damaging to its business as many feared.

It forecast full-year profits at the top end of expectations and said retail turnover grew by 4 per cent in December, despite the weather disruption.

Rival Ladbrokes benefited from the cheer, up 3.2p to 135.3p.

Pub chain JD Wetherspoon followed the firms with a 23p gain to 464.7p after sales growth almost doubled to 3 per cent in the 12 weeks to 16 January, up from 1.6 per cent in the previous quarter.

Trading conditions were less favourable in the consumer goods sector before Christmas as Kesa warned it expected to make a full-year loss in the UK. With the company bracing the City for results at the bottom end of expectations, shares slumped 14.8p to 136p.

HMV shares fell 3 per cent or 0.8p to 25.5p after the music store confirmed its suppliers were being hit by a reduction in credit insurance amid fears over the chain's trading position.

Among the Scottish stocks, Faroe Petroleum was up 1.7 per cent or 3.5p to 214p after announcing three new prospective licences in the Norwegian Sea.Scottish & Southern Energy was down 7p to 1,206p despite announcing a new alliance to bring down the cost of offshore wind power.