Market report: Lloyds overhaul plan boosts banks

BANKING stocks helped lift the Footsie sharply higher yesterday after Lloyds Banking Group chief executive Antnio Horta-Osrio unveiled his eagerly-awaited plans to overhaul the lender.

The FTSE 100 index gained 89.76 points or 1.5 per cent to 5,945.71, with Lloyds almost 10 per cent or 4.34p higher at 49p after Horta-Osrio, who took up the top post in March, said he hoped the markets would find his strategic review "clear and simple", with Lloyds set to cut a further 15,000 jobs.Sentiment was also boosted by a solid start on Wall Street after better-than-expected manufacturing data for the Chicago area and lower weekly jobless claims.

A second approval in the Greek parliament for the new austerity package lifted the euro to €1.10 against the pound, while sterling also drifted down to $1.60 against the dollar.

But it was the banks, and Lloyds in particular, that held the market's attention. Bruce Packard, financials analyst at Seymour Pierce, said the overhaul "looks sensible", while another brokerage, Espirito Santo, added that the revamp could clear the way for the bank to restart dividend payments in 2013.

Other banks rose alongside Lloyds, with Royal Bank of Scotland adding 1.7p to 38.5p and Barclays up 7.2p to 256.5p.

HSBC was another riser on plans to trim its UK cost base through 700 job losses at its wealth management division. The shares added 6p to 618.4p.

Better-than-expected US oil inventory data boosted crude oil prices and triggered a 2 per cent boost for BP shares, which were up 9.3p at 458.7p. Gas producer BG Group was almost 5 per cent higher, up 64p at 1,414p, after it doubled its reserves and resources estimates linked to its Santos Basin in the south Atlantic.

BSkyB shares were broadly flat after the UK government provisionally accepted plans by takeover suitor News Corporation to hive off Sky News as a separate company. Shares were 1.5p lower at 846.5p.

Outside the top flight, entertainment group HMV shares dipped as it revealed underlying profits slumped 61 per cent to 28.9 million - which was in line with expectations.Shares were 0.3p lower at 9.7p.

London Stock Exchange was another riser, adding 105p, or 11 per cent, to 1,061p as traders speculated the collapse of the proposed merger with its Canadian counterpart TMX on Wednesday could make it a takeover target.

Mr Kipling cakes and Hovis bread maker Premier Foods slumped 22 per cent or 5.5p to 19p as it warned on profits after it struggled to pass on soaring commodity costs to its supermarket customers amid the squeeze in consumer spending.

Edinburgh-based microchip maker Wolfson was up 6.7 per cent or 10.75p at 170.75p as it recovered some of the ground lost during Monday's profit warning-enduced sell off.

Iomart, the Glasgow-based website hosting firm, continued its recent run of good form - up 3.5 per cent or 3.5p at 102.5p - in the wake of a series of positive analysts comments following last month's full-year results.

Fellow tech stock Cupid - which operates dating websites from its Edinburgh base - was also on the rise, up 5 per cent or 12p at 250p.