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Banks lift FTSE after debt rules eased

by Chris Marshall on Jan 13, 2014 at 09:33

Banks lift FTSE after debt rules eased

Banking shares ensured a cheerful start to the week for Britain’s FTSE 100, gaining after global regulators diluted a planned debt limit for banks.

The move to adjust the ‘leverage ratio’ by the Basel Committee on Banking Supervision at a meeting in Switzerland on Sunday comes after intense lobbying from bankers.

Barclays (BARC.L) was the biggest beneficiary, up 2.5% to 290p, which analysts said was because the changes were likely to be most beneficial to investment banks.

Royal Bank of Scotland (RBS.L) rose 2% to 363p and Lloyds (LLOY.L) was up 1.5% at 84p.

The overall mood in London was cautious after Friday’s surprise set of numbers on the US labour market. The US nonfarm payrolls report showed a gain of 74,000 jobs, less than half that expected, while the unemployment rate dropped to 6.7%, the lowest since October 2008. The FTSE 100 rose 0.1% to 6,749.

Morrisons (MRW.L) also provided some support for the blue chip index, rising 3.3% to 244p amid reports that the supermarket group is considering selling up to 10% of its properties.

Clive Black, an analyst at Shore Capital had his doubts about such a sale: ‘Whilst there can be short-term gains for shareholders from a comprehensive property sale programme through distributions, we question whether such activity is in the interest of the company in the long-run; will the shareholders that may seek short-term radical action be there for the duration?’ he questioned.

Royal Mail (RMG.L) slipped back 0.4% to 580p after two announcements; firstly, price hikes for businesses; and secondly, the replacement of Mark Higson by Sue Whalley, who becomes chief operations officer.

Royal Mail remains a ‘buy for Alex Paterson, an analyst at Espirito Santo. ‘We believe RMG's announcements are sensible and may limit the potential impact of end-to-end competition, one of our key highlighted risks,’ said Paterson.

Debenhams (DEB.L) was the top gainer among mid-cap stocks, rising 4.3% to 85p on the news that Sports Direct (SPD.L) has snapped up a 4.6% stake in the department store.

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