United kingdom Daily news: FTSE CLOSE: Barclays shares drag markets down amid continuing fears over rate-rigging scandal

FTSE CLOSE: Barclays shares drag markets down amid continuing fears over rate-rigging scandal

By This Is Money Reporters

PUBLISHED: 02:31 EST, 4 July 2012 | UPDATED: 11:43 EST, 4 July 2012

17.25 (close): Banking shares dragged London's leading shares index lower today amid continuing fears that more lenders will be embroiled in the rate rigging scandal.

The FTSE 100 Index fell 3.3 points at 5684.5, with banking shares among the losers as former Barclays boss Bob Diamond looked to shift the focus onto his rivals during his grilling at the hand of MPs.

With his marathon testimony still going on as the London market shut, Lloyds was down 0.2p at 31.7p, Royal Bank of Scotland was off 2p at 214.5p and HSBC was 2.7p lower at 567.6p.

Hostile questioning: Angry MPs are interrogating Bob Diamond over the Libor rate-rigging scandal

Barclays was down 1.1p at 166p after Oriel Securities cut its target price, saying it expects Barclays Capital to be wound down.

The beleaguered lender's shares are significantly lower than the 196p at which they opened last Thursday before the bank saw around Â£3 billion wiped from its market value as the Libor-fixing affair escalated.

However, London's leading share index was still close to two month-highs. World markets have been boosted in recent weeks by hopes that central banks will announce more stimulus measures although the rally ran out of steam today.

France's Cac-40 and Germany's Dax were both slightly lower, while markets in the US were closed for Independence Day.

The pound was down against the dollar at 1.56 after the services sector suffered its worst performance for eight months in June, suggesting the UK remains in recession and increasing the chances of more quantitative easing. But sterling was up at 1.25 against the euro.

Tullow Oil was among the biggest fallers in London's top flight after it said earnings will take a 440 million US dollar (Â£280.4 million) hit as it writes off assets following unsuccessful drilling campaigns. It was down 2 per cent, or 29p at 1502p.

Outside the top flight, housebuilder Taylor Wimpey was down 2.5 per cent even though it said its markets remain stable and it expects to report an improved performance for the first half of 2012.

The group, which teetered on the brink of collapse in 2009 due to its massive debts, said it had recorded an average of 0.6 sales per week in the half year to July 1, compared to 0.56 in the previous year. Shares were off 1.3p at 48p.

Meanwhile, support services company Carillion saw its shares fall 3 per cent after Government cut-backs hit first-half revenues.

However, the Wolverhampton-based firm said it has grown profit margins by being more selective in bidding for contracts, which helped offset a decline in UK construction revenues amid the Government's austerity drive. Shares were down 9p at 273.1p.

International Greetings, the official supplier of Christmas crackers to the Queen, saw shares rise 5 per cent after it reported a jump in annual profits driven by a surge in greeting cards sales in the UK. Shares rose 2.5p to 53.8p.

The biggest Footsie risers were Aberdeen Asset Management up 8.8p at 263.8p, Glencore ahead 8.3p at 312.1p, Xstrata up 14.4p at 820.8p, and GKN ahead 3p at 186.6p.

The biggest Footsie fallers were Vedanta Resources down 19p at 942p, Aviva off 5.5p at 281.4p, Tullow Oil down 29p at 1502p, and Babcock off 13p at 871p.

15.30: Barclays shares have edged back into the black as ex-boss Bob Diamond faces a barrage of hostile questioning from MPs over the Libor scandal.

The stock was down 0.7 per cent just before the Treasury Select Committee hearing began, but has clawed back to trade 1 per cent or 1.63p higher at 168.68p.

But the rest of the banking sector remains in the red as investors try to assess the fallout of the rate-rigging furore on the wider industry.

Meanwhile, stockbroker TD Direct Investing revealed heavy trading in Barclays stock in the week ending Monday 2 July.

It accounted for almost half (48.4 per cent) of the top ten buys and almost one fifth (18.7 per cent) of the top ten sells. The buy:sell ratio was 4.7:1.

The FTSE 100 has turned positive late in the session and is up 5.6 points at 5,693.3.

13.45:

The FTSE 100 is down 9.9 points at 5,677.9, but lacking much impetus as Wall Street remains shut for Independence Day.

The banking sector is stuck in the red just ahead of Bob Diamond's appearance before the Treasury Select Committee, amid fears other institutions could be hit with fines from regulators or suffer damage to their reputations.

Barclays was lagging 1.3p at 165.8p, Lloyds was down 0.5p at 31.3p, HSBC was off 7.3p at 563.1p, and Royal Bank of Scotland was 3.4p lower at 213.2p.

Tullow Oil fell after it said earnings will take a $440million (Â£280.4million) hit as it writes off assets following unsuccessful drilling campaigns. It was down 2 per cent or 32p at 1499p.

Support services company Carillion saw its shares fall 3 per cent after Government cut-backs hit first-half revenues.

Shares were down 9.7p at 282.4p. Read more here.

International Greetings, the official supplier of Christmas crackers to the Queen, saw shares rise 2 per cent after it reported a jump in annual profits driven by a surge in greeting cards sales in the UK.

The Hatfield-based company, which sells Christmas crackers, cards and stationery, saw underlying pre-tax profits increase 37 per cent to Â£7.1million in the year to March 31. Shares rose 1p to 52.3p.

April's dismal weather put focus back on home improvement projects, helping Topps Tiles posting robust sales, the retailer said today.

Like-for-like sales rose by 2.1 per cent in the 13 weeks to June 30, rebounding after a 1.9 per cent fall last year. Its shares were 5 per cent or 1.88p higher at 40.63p. Read more here.

11.45:

The FTSE 100 remains subdued today amid thin trading - it's down 13.6 points at 5,674.1.

The focus remains on the banks as the Libor scandal continues to rage, with Barclays 0.62p lower at 166.43p and the rest of the sector also racking up l osses

'The Libor fixing scandal is turning into a perfect storm that could engulf the heart of the banking and finance community,' said Joshua Raymond of City Index.

The allegations against the Bank of England could do 'irreparable damage' to the image of the City of Londonâ€™s financial centre, he added.

'Of course, we have only seemingly heard one side of the story and now the ground has been set for a volatile game of verbal tennis at the Treasury Committee whereby Bob Diamond could imply that a member of the Bank of England was not only aware of the fixing scandal, but also culpable.

'Whilst both Barclays and the BoE could leave this as a case of miscommunication between [the BoE's Paul] Tucker and [Barclays' Jerry] Del Missier, many will still find it hard to imagine that two highly experienced inviduals could have gotten crossed wires over this issue.'

Gary Jenkins of Swordfish Research said: 'Clearly there has been a lot of speculation regarding other banks' involvement in the Libor scandal but the extent of their involvement and the potential impact upon their risk profile, reputation, management teams and strategy are unknown.

'Obviously the Barclays attempt to gain some kind of first mover advantage has been a complete disaster but the key for the industry as a whole is that this latest debacle will only empower regulators and politicians and thus ultimately it might be the framework in which they operate that changes.'

In other corporate news today, housebuilder Taylor Wimpey was down 1 per cent even though it said the housing market remains stable and it expects to report an improved performance for the first half of 2012.
Shares were off 0.7p at 48.6p. Read more here.

Brent crude is trading at $100.20 a barrel today while gold is at $1,616.60 an ounce.

10.00:

Bank stocks have dropped ahead of ex-Barclays boss Bob Diamond's showdown with MPs this afternoon.

Fears are rife other banks will be drawn int o the affair as Diamond prepares to appear before the Treasury Select Committee to answer questions about the Libor rate-rigging scandal.

Barclays was down 1.2p at 165.8p after Oriel Securities cut its target price, saying it expects Barclays Capital to be wound down.

The beleaguered lender's shares are significantly lower than the 196p at which they opened last Thursday before the bank saw around Â£3billion wiped from its market value as the Libor-fixing affair escalated.

Meanwhile, Lloyds was down 0.2p at 31.6p, HSBC was off 6.2p at 564.1p, and Royal Bank of Scotland was 2.4p lower at 214.1p.

The FTSE 100 is also down 13.7 points at 5,674.1 with a quiet day expected as Wall Street is closed for the Independence Day holiday.

David Morrison, senior market strategist at GFT Markets, said: 'Volumes will be light due to the U.S. holiday. This should give traders the opportunity to sit back and enjoy watching Bob Diamond as he appears before the Tre asury Select Committee at 2pm today.

Market watch: Traders are anticipating more economic stimulus from central banks

'This was set to be a savaging of the Barclays' CEO by a panel of UK politicians. Many of them cannot wait to throw his words back in his face after he declared some months ago that the time for bankers to apologise was over.

'But since Diamond's sudden resignation yesterday, there is an expectation that he is ready to fight back. Rather than cutting a contrite figure, Mr Diamond looks set to implicate the Bank of England, the UK Treasury and senior political figures in the Libor scandal. It should make for good viewing - let's hope he doesn't let us down this time.

'Of course, there are another 15 banks involved in setting the Libor rate, and traders are already trying to work out which bank is next for the Barclays treatment.'

Simon Denham of Capital Spreads said: 'All eyes will be on Mr Diamond today as he appears in front of MPs to be grilled by them over the Libor issue.

'The fact that he has resigned is unlikely to make MP s any less hostile towards him but equally it puts him in a much stronger position to defend himself.

'The mudslinging might make interesting viewing as the BOE and senior politicians are dragged into the fray, but importantly, probably every other bank CEO will be watching to see what the implications, if any, are for them.

Veteran City commentator David Buik of BGC Markets said: 'I doubt he will go without having a full say on his interpretation of what went on in the corridors of power in the Treasury, with the previous administration and the Bank of England, his views on LIBOR being an anachronism and Barclays' role in the manipulation of LIBOR.

'It will be a full and frank discussion.'

8.30: The FTSE 100 has opened down 6.9 points at 5,680.8 as investors pause for breath ahead of tomorrow's central bank meetings.

Trading is likely to be thin today with Wall Street closed for Independence Day, but traders are growing hopeful of more economic stimulus after the surprise action to tackle the eurozone debt crisis at last week's EU summit.

The Bank of England might launch a third round of monetary stimulus to combat the recession, while the European Central Bank is expected to cut interest rates to a record low of less than 1 per cent.

'The outcome of the EU summit, together with hopes of monetary stimulus, has definitely helped to put a floor under risk appetite,' said French bank Credit Agricole.

'Although it is difficult to become too positive given the still very significant downdraft to global growth, officials in Europe have bought some time to get their collective house back in order.'

The FTSE 100 closed 47.09 points higher on Tuesday at 5,687.73, hitting a two-month high and extending its gains into a third session.

Barclays shares were higher for most of the day after chief executive Bob Diamond quit, but ended down 1.4p at 167.1p as chief operating officer Jerry del Missier followed his boss out the door.

The stock has opened slightly lower today, off 0.62p at 166.43p, and will be closely watched as Diamond faces MPs' questioning at a Treasury Select Committee hearing later.

London copper edged down as investors locked in recent steep gains, waiting for more signs that central banks are prepared to take action to revive a faltering global economy that has dented demand for industrial metals.

Brent crude slipped but stayed above $100 per barrel as tension over Iran's nuclear programme fed worries about supply disruption.

The services purchasing managers' index for June is due out later with a Reuters poll predicting a reading of 52.8, down from 53.3 in May. A reading above 50 means it would still be in expansion territory.

Shop price inflation fell to its lowest rate in two-and-a-half years in June as weak demand pushed retailers to offer deep discounts, the British retail Consortium said.

Stocks to watch include:

Barclays: Bob Diamond squares up to MPs at a Treasury Select Committee hearing a day after quitting as chief executive over the Libor interest rate scandal. Explosive revelations are anticipated, potentially dragging the Bank of England, last Labour government and rival banks deeper into the affair.

Tullow Oil: The oil explorer sees record first-half revenues of $1.15billion, and net debt at 30 June 2012 approximately $0.7billion. The company added it is confident on output.

Carillion: TheÂ support services company said the first half was in line with expectations, the bid pipeline had grown to Â£35billion and underlying profit and earnings were on track to meet full-year hopes.

Taylor Wimpey: The housebuilder said it will report improvements across all key financial metrics at half-year results and despite continued uncertainty the UK housing market has remained stable in first-half.

Johnsons Service Group: The te xtile services and facilities management group said trading for the first half is expected to be in line with management's expectations.

Hunting: The oil services firm said trading in the first six months of the year has been underpinned by an adequate oil price and it remains well positioned in its global markets with a broad product.

Topps Tiles: The flooring retailer said like-for-like revenues across the full 13 weeks of the third quarter increased by 2.1 per cent and it remains comfortable with market expectations for the year as a whole.

Aquarius Platinum: The miner said its 2013 budget focused on cash conservation, preservation of reserves and all non-essential capital expenditure will be suspended.

Genus: The animal genetics company said it is on track for the year after strong final months and it expects to report adjusted profit before tax in line with market expectations.