Banks drag FTSE down, awaiting Irish debt solution

Banks drag FTSE down, awaiting Irish debt solution

London: Britain’s top share index fell on Friday, retreating after strong gains in the previous session, with banks weaker as the market waited for a final deal to address Ireland’s debt crisis.

By 3:00pm, the FTSE 100 was down 36.78 points, or 0.6%, at 5,731.93, having closed 1.3% higher on Thursday.

Banks fell back after Thursday’s advance, as investors retreated to the sidelines until a definitive solution is found to Ireland’s problems.

Ireland’s central bank chief said on Thursday he expected Dublin to receive tens of billions of euros in loans from European partners and the IMF to provide contingency capital for its shattered banks.

Royal Bank of Scotland shed 0.3%, while Lloyds Banking Group was 1.8% weaker.

“There’s the prospect of some additional action in Ireland over the weekend, so I’m expecting a reasonably quiet day, with investors continuing to keep their risk positions pretty limited," Peter Dixon, economist at Commerzbank, said.

Mining stocks, which also rose in the previous session, went into reverse, on persistent concerns that China might adopt more stringent measures to keep inflation under check, including a drastic rise in interest rates.

Outsourcer Capita extended its decline from Thursday when it issued a trading update. It was down 2.8%, topping the blue-chip fallers’ list, hurt by an HSBC downgrade to “underweight".

On the upside, software firm Autonomy was the FTSE 100’s biggest gainer, up 2.9%, with traders citing its analyst day on Nov. 29 as a potential catalyst, and with sentiment surrounding the technology sector lifted by earnings-busting results from US computer maker Dell.

Testing equipment company Intertek bounced back 1% after a big fall on Thursday when it issued a cautious trading update.

Cairn Energy added 0.2% after India-focused mining group Vedanta Resources, down 0.1%, agreed a $6 billion financing deal with a consortium of banks to help fund its proposed acquisition of a majority stake in the Indian unit of Cairn Energy.