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Google shares suspended, Barclays hit by fresh PPI claims

Google shares suspended, Barclays hit by fresh PPI claims

(Update) Google has shocked the US stock market with a slump in quarterly profits that saw its shares plunge 9% before trading was suspended.

The early release of the search engine operator's third quarter results surprised investors with earnings of $2.18 billion down from $2.73 billion a year ago. It was not immediately clear what lay behind the sudden decline in profits.

US stock markets were already struggling to make headway after three days of gains. Aftrer the news the tech-heavy Nasdaq index slid 28 points or 1% to 2,746 while the Dow Jones industrial average shed seven points to 13,549 and the S&P 500 dipped four points to 1,456.

Investors had already started to take profits after disappointing jobs figures showed US jobless claims rose last week to 388,000, from a revised 342,000.

In London Barclays shares (BARC.L) fell after the bank set aside another £700 million for compensating customers mis-sold payment protection insurance (PPI) policies.

The move lifts its total provisions for the PPI scandal to £2 billion and follows another surge in PPI claims since the end of June.

The shares slid 4p or 1.7% to 240.3p.

UK banks have set aside over £10 billion pounds for PPI mis-selling, and the bill could now rise if other banks follow suit.

Banks encouraged borrowers to take out expensive PPI policies to cover loan repayments in case they fell ill or lost their jobs. However, often the policies were often sold to people who would not be eligible to make a claim.

The news did not take the shine off the FTSE 100, though, which closed 13 points or 0.2% higher at 5,924, its fourth consecutive day of gains.

European markets were also flat with the Euronext 100 index closing virtually unchanged at 669.6 as investors awaited the start of the European Union summit.

BA owner International Consolidated Airlines Group (IAG.L) was the biggest blue chip riser in London, soaring 4% higher to 164p.

Miners and engineering stocks were inspired by China’s third-quarter GDP figures, which indicated that the downturn in the world’s second largest economy may be drawing to an end. GKN (GKN.L) and IMI (IMI.L) led the charge, up 3.3% to 214p and 942p respectively, followed by Kazakhmys (KAZ.L) and Evraz (EVRE.L) 2.8% and 2.6% higher at 781p and 259p.

For more on today's risers and fallers see our FTSE pages and this morning's market report.

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