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Banks drag FTSE lower as Greek debt talks resume

Banks drag FTSE lower as Greek debt talks resume

16.20: (Afternoon update)  The FTSE 100 closed 41 points or 0.7% down at 5,778 after the UK's main stock market index followed Wall Street lower in afternoon trading.

In the US the Dow Jones industrial average fell 100 points or 0.7% to 12,909 and the S&P 500 shed nearly nine points or 0.6% to 1,400 as investors returned from the Thanksgiving holidays to find the country's 'fiscal cliff' problem had not been solved and talks to finalise the ongoing bailout of Greece were still dragging on.

In Europe the Euronext 100 matched these declines with a 4.6 point drop to 660.

Sterling, after initially rising in response to the surprise appointment of Mark Carney as the next governor of the Bank of England, fell back to trade 0.16% down against the dollar at $1.6006 and unchanged at 80.94p against the euro. 

Banks continued to be the big drag on the FTSE 100 with Barclays (BARC.L) closing 5.5% or 14p down after Qatar's sovereign wealth fund, its largest shareholder, sold the last of its warrants it bought as part of a controversial fund raising by Barclays at the height of the financial crisis four years ago.

According to Reuters the warrants were sold to Deutsche Bank and Goldman Sachs who meanwhile sold up to 303 million shares, worth £740 million, at 244p, a 4% discount to their closing price on Friday.

Morning Market:

The FTSE 100 dipped seven points or 0.1% to 5,811 as investors took profits after last week’s rally and amid caution at the ongoing talks over Greek debts.

Banks led the blue chip index lower with Barclays (BARC.L) sliding 3.6% or 9.3p to just under 245p after the Financial Times reported that some of the bank’s biggest shareholders were urging it to cut its investment banking division.

Qatar Holding, the bank’s biggest shareholder, has also sold its remaining warrants in the bank.

Meanwhile Royal Bank of Scotland (RBS.L) fell 1.5% to 289.6p on fears that it could receive separate fines from UK and US regulators over the Libor interest rate rigging scandal. 

Lloyds (LLOY.L) shed 0.8% to nearly 46p in sympathy.

Tullow Oil (TLW.L), a Citywire Top Stock held by Tom Dobell in the M&G Recovery fund, fell 0.7% to £13.83 after the drilling results of its Twiga South well in Kenya disappointed investors. However, analysts at Barclays Capital said the findings were more positive than they looked as Tullow had been drilling at a difficult part of the project.

Aberdeen Asset Management (ADN.L) rose 5.6p or 1.6% to 348.3p after the investment group beat expectations with a 15% increase in underlying profits for the year to 30 September. It said its emerging markets and Asia Pacific funds continued to be popular as it announced a 7.1p final dividend, raising payments for the year to 11.5p up from 9p last year.

GlaxoSmithKline (GSK.L) softened 3p to £13.44 after the drugs giant bought a further 31.8% stake in its Indian consumer products arm for about $940 million. This takes its holding in GlaxoSmithKline Consumer Healthcare to 75%.

SDL (SDL.L) slid 42.5p or 8.3% to 468.5p as the translation software provider warned that full-year profits would fall between £3 million and £4 million short of expectations. Mark Lancaster, the chairman who temporarily took on the role of chief executive following the departure of its previous boss this month, said the company was taking a more cautious view of the contracts it would complete in the second half of the year and that its forecasts for the year were too optimistic.

George O'Connor, analyst at Panmure, expressed his disappointment and dowgraded the stock from 'buy'  to 'hold', cutting his price target from 617p to 538p. The fall in the share price values SDL at £275 million.

Betfair (BETF.L) slipped 10.5p or 1.4% to 742p after the online gambling exchange said it would pull out of the Greek market until there was more clarity on regulation in the country.

Centamin (CEY.L) shed nearly 5p or 7.6% to 59.8p as it filed an appeal to a recent court ruling challenging its right to its gold mine in the country.

Cranswick (CWK.L) leaped 29.5p or 4% to 768.5p after the pork processor reported a 21% increase in half-year profits. Last month it warned that record pig prices were set to continue. Today it said talks with customers about price increases were going well.

In October Paul Marriage, manager of the Cazenove UK Smaller Companies fund, a pick of our Citywire Selection analysts, told Citywire he had sold out of Cranswick over concerns about its falling margins.

In Europe the Euronext 100 traded nearly two points off at 663. Both the pound and the euro fell against the dollar, trading respectively at $1.6009 and $1.2950. The euro also dipped against sterling to 80.89p. Gold slipped 0.2% or four dollars to $1,748 an ounce.

Go to our FTSE data pages to see the day's other big risers and fallers

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Tom Dobell
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