FTSE 100 held back by US news

Apr 15 2009 by Iain Laing, The Journal

DISAPPOINTING US economic data held back gains on London’s leading share index yesterday as falls on Wall Street offset another strong session for banks.

Blue chip banking stocks raced higher after strong results from US giant Goldman Sachs gave the sector a boost and raised hopes that the worst of the financial crisis could be over.

But news of an unexpected drop in US retail sales hit wider investor sentiment, leaving the FTSE 100 Index 5.3 points up at the close, at 3989.

Other gloomy economic indicators, including business inventory data and wholesale inflation figures, added to fears that the world’s biggest economy was far from recovering.

However, the rally among British banks continued apace thanks to Goldman’s better-than-expected £1.1bn first quarter profits, helping send Barclays’ share price to its highest in more than five months.

Goldman’s results followed those from fellow US bank Wells Fargo on Thursday, which had already helped put the battered sector in favour.

Lloyds Banking Group and Barclays both posted double-digit percentage gains, adding 8.4p to 87.9p and 18p to 195.5p respectively.

Barclays was also buoyed by weekend reports that it could still sell its entire asset management arm, despite the £3bn iShares deal struck with CVC on Thursday.

Elsewhere Royal Bank of Scotland was ahead 0.2p at 29.2p.