TUESDAY MARKET CLOSE: Lloyds higher amid dividend hopes

Banking stocks helped the Footsie make headway as investors anticipated gains to be made from recovering housing and car markets.

Lloyds Banking Group was one of the biggest risers amid expectations that it will announce a return to dividend paying at its next results presentation.

Zeg Choudhry, head of equities trading at Northland Capital, said: “Lloyds is a domestic story - if the property market is going to do well, then the leverage you get out of Lloyds is great, plus the shares are going to pay a dividend this year, so the income funds will be buying them.”

Lloyds added 3 per cent or 2.4p at 82.51p, while HSBC was also on the risers’ board, up 15.8p at 675.8p. Royal Bank of Scotland trended higher after announcing the sale of some of its US branches in a move that bodes well for the expected flotation of its Citizens business later this year. The shares closed 6.1p higher at 350.4p.

The FTSE 100 Index climbed 24.72 points to 6,755.45.

British Airways owner IAG was also flying high as it released its December traffic statistics showing numbers 10.6 per cent year-on-year. It soared 3.5 per cent, adding 14.2p to 428.2p.

On the downside, technology stocks have taken a hit after Samsung posted its first drop in profits in nine quarters. Chip maker Arm Holdings, which supplies the major phone brands, was down 2 per cent at 1,055p.

Royal Mail was also down about 2 per cent after broker Cantor Fitzgerald sounded a note of caution. The shares have surged from their starting point of 330p in October to a high point above 600p in recent weeks, but Cantor suggested now was the time to sell as it initiated coverage of the company with a 500p target price. The shares closed 11p lower at 561p.