Markets: Banks rise and shine as miners wilt

The banking sector kept the FTSE 100 Index out of the red yesterday and offset falls from heavily-weighted miners.

The Footsie closed 2.1 points higher at just below 6,087.4 after struggling to make headway throughout the session.

Will Hedden, sales trader at IG Index said: "Traders barely noticed the early-morning flurry through the 6,100-level - the index briefly traded above there for the first time since May 2008."

On Wall Street, investor confidence was shaken by worse-than-expected US inflation and unemployment data and emerging political unrest in Libya, Bahrain and Iran.

The US labour department reported a higher-than-expected increase in unemployment claims last week and inflation increased on a monthly basis at an above forecast 0.4 per cent in January.

In London, miners also weighed the market down as copper prices stumbled to three-week lows, with Xstrata down 3 per cent or 37p at 1,440p, while Kazakhmys was not far behind, dropping 33p to close at 1,505p.

The pound was boosted by a hawkish speech from Bank of England monetary policy committee member Andrew Sentance, who stepped up his case in favour of an interest rate hike. Sterling rose to $1.61 and €1.18.

In corporate news, BAE Systems sank to the bottom of the FTSE 100, losing 4 per cent or 14.8p to end the day at 340.9p, after the defence giant warned sales were likely to fall in 2011.

Shares in B&Q-parent Kingfisher dropped 0.8p to 256.5p despite forecasting a 20 per cent rise in full-year profits.

The group said strong international growth helped to offset continued tough trading in the UK as full-year profits are expected to be at the top end of analysts' expectations.

Banks littered the risers' board as confidence in the sector was boosted by this week's upbeat figures from Barclays and French giant Societe Generale.

Royal Bank of Scotland led the sector, adding 1.8p to 49p and closing in on the 50p break-even level for the UK government's stake, while Lloyds was not far behind, up 1.98p at 69.2p. Barclays was also on the rise, up 1.6p at 333.6p, while HSBC climbed 9.4p to 730.9p.

It was the third session in which banks have outperformed the market after Barclays announced a 32 per cent rise in pre-tax profits to 6.1 billion on Tuesday.

Outside the top flight, Ladbrokes' shares dropped 2.5p to 139.5p after the UK's biggest bookmaker reported a 20 per cent jump in annual profits. Meanwhile, Sports Direct fell 1.8p at 165.8p despite confirming it will meet its profits target of 205 million, triggering a 10.8m pay-out for more than 2,000 staff.RBS Equities kept its "hold" rating on Stagecoach, shrugging off Wednesday's refusal by US regulators to let the Perth-based transport group create a joint venture (JV) to run bus tours in New York.

Analyst Joe Spooner said the JV was neither "core" not "material" to Stagecoach's profits and so expected the City reaction to be muted. Shares in Stagecoach dipped 0.2p to 211.8p. Aberdeen-based bus and rail rival FirstGroup was up 7.9p or 2.1 per cent at 376.4p.