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Lloyds leads FTSE 100 lower | |
(about 1 hour later) | |
(Noon): An early rally soon fizzled out, with Lloyds Banking Group the biggest faller on the FTSE 100 after it narrowly passed European stress tests. | |
Shares in Lloyds fell 2.4%. The European Banking Authority's results showed Lloyds only narrowly passed the capital under adverse scenarios test. | |
As a result, there are doubts over when Lloyds will be able to restart dividend payments. | As a result, there are doubts over when Lloyds will be able to restart dividend payments. |
The FTSE 100 index was down 4.94 points at 6,383.79. | |
"The news will weaken Lloyds' position as it negotiates with the FCA about restarting dividend payments, and the share price fall reflects a hasty recalculation among investors about the chances of an income stream from the bank in the future," said Chris Beauchamp, market analyst at IG. | "The news will weaken Lloyds' position as it negotiates with the FCA about restarting dividend payments, and the share price fall reflects a hasty recalculation among investors about the chances of an income stream from the bank in the future," said Chris Beauchamp, market analyst at IG. |
Other UK banks were also trading lower, with Royal Bank of Scotland down 1.1% and Barclays falling 0.9%. | |
The biggest reaction to the stress tests was seen in Italy, where shares in Monte dei Paschi sank more than 15% and were then suspended. The stress test revealed it had a capital shortfall of €2.1bn (£1.65bn, $2.6bn). | |
Travel shares were having a better day as oil prices fell and worries about the impact of the Ebola virus eased. | |
Travel company TUI Travel rose 2% and Intercontinental Hotels Group climbed 2.5%. | |
The price of Brent crude oil dipped after Goldman Sachs cut its oil price forecasts. | The price of Brent crude oil dipped after Goldman Sachs cut its oil price forecasts. |
Goldman now expects Brent to be about $85 a barrel in the first quarter of 2015, compared with its previous forecast of $100. | Goldman now expects Brent to be about $85 a barrel in the first quarter of 2015, compared with its previous forecast of $100. |
It has also cut its forecast for the price of US crude to $75 a barrel from $90. | It has also cut its forecast for the price of US crude to $75 a barrel from $90. |
Brent crude for December delivery fell 25 cents to $85.88 a barrel, while US edged up 2 cents to $81.03 a barrel. | Brent crude for December delivery fell 25 cents to $85.88 a barrel, while US edged up 2 cents to $81.03 a barrel. |
On the currency markets, the pound rose 0.04% against the dollar to $1.6096 and was unchanged against the euro at €1.2699. |