Market watch

BELEAGUERED oil giant BP and part-nationalised lender Royal Bank of Scotland will post figures this week during a busy few days in the City.The Gulf of Mexico oil disaster is set to dominate third-quarter results from BP on Tuesday, but long-suffering investors will be looking for signs of a turnaround after the tragedy that almost brought the group to its knees.

BP's newly appointed chief executive, Bob Dudley, was frank in a speech at the CBI last week, saying the disaster "threatened the very existence" of the company.

However, he also sought to put to bed the many rumours surrounding the firm, stressing that it was financially "healthy" and would not, as many have speculated, be quitting the US.

The firm's third-quarter update will give a clearer picture of how the tragedy will affect its business, but will also be looked at for vital clues on plans for a return to dividend payments.

Dudley has hinted at a potential return to quarterly dividends next year, although analysts are not expecting any further concrete guidance in Tuesday's update.

The market consensus forecast is for BP to make profits of $4.6 billion (2.8bn) in the three months to September.

Figures are due from some of Britain's major banks as the UK third-quarter earnings season gets under way. Better-than-expected overall results from their US counterparts have raised hopes for a robust quarter.

But the recent Basel III rules forcing banks to put aside more cash in reserve has raised the issue of capital requirements.

Santander last week revealed how tough lending is currently in its third quarter update. Its net mortgage lending slumped to 1.8bn against 3.1bn a year earlier.

Santander's figures also highlighted the impact of aggressive competition for savers as its retail deposits shrunk to less than a quarter of the levels seen a year ago.

This will also be in sharp focus at HSBC and Royal Bank of Scotland when the pair deliver updates on Friday. HSBC will be looked to for further improvements on bad debts after this helped profits leap 121 per cent in the first half.

RBS's investment banking operation will likewise be examined following the disappointing US trends. The group, which is 83 per cent owned by the taxpayer, is another under scrutiny following Basel III rules on capital strength in spite of its turnaround into profit at the half-year stage.

Transport giant First Group is expected to report a robust first-half performance on Wednesday after a boost for its more expensive fares drove revenues higher. The Aberdeen-based firm, which runs First ScotRail and several other rail franchises, previously said demand for first-class train travel was recovering to levels not seen since the recession struck.

Mark Manduca, an analyst at Bank of America Merrill Lynch, said he expected "moderate earnings growth" in the update. Bank of America has forecast full-year pre-tax profits of 278.3m, up from 264m last year.