Peter Ranscombe: City lukewarm over bank changes

Britain's top share index fell from a four-month closing high and ended a seven-session winning run yesterday, led lower by Barclays after management changes and miners on concerns over Australia's tax plan.

Changes at the top of banking giants Barclays and HSBC received a lukewarm response from investors.

Bob Diamond's promotion to replace John Varley as chief executive of Barclays failed to boost shares, while HSBC also slipped into the red after chairman Stephen Green was appointed as the UK government's new trade and investment minister.

Fresh concerns over the eurozone brought the Footsie's rally to an end, with the index closing down 31.37 points at 5,407.82 - the first finish in the red for seven sessions.

Wall Street's Dow Jones Industrial Average - back in action after Monday's Labour Day holiday - fell 0.7 per cent in early trading after official figures showed a bigger-than-expected drop in German manufacturing orders in July of 2.2 per cent month-on-month.

Markets on both sides of the Atlantic were also unnerved by a report in the Wall Street Journal, which claimed that the EU stress tests of 91 banks in July understated some lenders' holdings of potentially risky debt.

The pound gained ground on a weak euro, up 0.5 per cent to €1.20, but on-going concerns over the strength of the UK economy hampered progress against the greenback, down 0.3 per cent to $1.53.

The high-profile promotions and departures in the banking sector dominated the stock market in London. The appointment of US-born BarcCap boss Diamond to the helm was met with caution in the City amid worries it could increase emphasis on the riskier investment banking operation. Shares dropped 3 per cent, or 8.9p, to 314p.

HSBC shares initially saw a good run after Green announced his departure, but they later dropped 0.4p to 662.4p.

A cautious note on the retail sector from brokers at HSBC meant a number of stocks in the sector were under pressure.

HSBC lowered its price targets on Next and Home Retail Group, which fell 19p to 2033p and 4.6p to 222.5p respectively, while Marks & Spencer was 5.6p cheaper at 354.1p.

A shortened risers' board featured supermarket chain Morrisons, which lifted 1.6p to 291p ahead of half-year results tomorrow. Elsewhere, shares in online grocery firm Ocado remained under pressure after the recently-listed stock disappointed investors with a smaller than expected rise in third-quarter sales. Shares, which floated at 180p in July and fell to 130p last month, were down 11p at 146p, a drop of 7 per cent, as Shore Capital said it did not expect Ocado to make any "meaningful" profits for at least a further five years.

Connaught shareholders were left fearing the worst after the social housing firm requested a suspension in trading of its shares and said lenders had refused to provide further cash, fears that were confirmed after the close when the firm officially entered administration.

ProStrakan had the dubious honour of finishing at the foot of the FTSE All-Share faller's board - down 32.5 per cent at 53p - after the Galashields-based drugs developer issued a profits warning and lost chief executive Wilson Totten.