London shares end higher on cheer for banks

Friday 18 July 2008

The FTSE 100 share index closed down 90.1 at 5376.4

Latest economic numbers showed the UK budget deficit rising to £24.4 billion in the three months to end-June - the biggest it's been since records began. Changes to the government's borrowing rules, instituted by Gordon Brown when he became Chancellor, appear inevitable. And in a speech today Bank of England Deputy Governor John Gieve will accelerate "well over" 4% against a background of economic growth which is "slowing fast". On the plus side, the IMF believes Britain will avoid recession this year.

But the market's eyes where elsewhere - on Citigroup's results; the US banking giant turned in a smaller than expected loss of $2.5 billion Q2 loss. That news helped banking shares here.

Royal Bank of Scotland up 17.3 at 196.8,

Barclays up 29.75 at 320.25.

Two days after agreeing a new credit line, Invensys reported it expects to maintain earnings at its controls business despite a slow-down in US markets. Shares up 17.25 at 278.

Fund management group Aberdeen Asset Management rose 20.75 to 142.25 after it revealed a 6% rise in assets under management in the quarter ending March. The firm also announced a £57 million cost-cutting programme.

On an upgrade from UBS, National Grid shares gained 14 to 668.

Electrocomponents warned of slowing revenue growth since end-May on cutbacks by manufacturers across Britain and Europe. Revenues rose 1% in the quarter to end-June against a rise of 3.6% in the previous half year. Shares up 2.25 at 155.

Construction firm Kier is closing down four out of five regional homebuilding offices and cutting the divisions workforce by 60%. However, the shares rose 54.5 to 965 as the firm says its non-residential building and support services units are performing "strongly" with record order books.

Reckitt Benckiser dipped 68 to 2420, following news that French group LOreal had downgraded its full year outlook late Thursday.

At 5pm sterling was down 0.0033 against the dollar at $1.9956. Against the Euro, sterling was down 0.0003 at 1.2600.

18 July 2008 © Moneyextra.com

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