Monday 22 January 2018

Rising RBS shares push London market higher

The FTSE 100 Index closed up 18.53 points to 7,505.03, with RBS sitting among the biggest risers on the market.

London Stock Exchange sign (PA)
London Stock Exchange sign (PA)

By Ben Woods, Press Association Chief City Correspondent

London’s top-flight index pushed higher on Friday as investors snapped up shares in the Royal Bank of Scotland (RBS) after the lender swung to profit.

The FTSE 100 Index closed up 18.53 points to 7,505.03, with RBS sitting among the biggest risers after the bank chalked up its third consecutive quarter in the black.

The bank, which is still 72% owned by the taxpayer, beat expectations by recording a £392 million profit for the quarter to September 30, which compares with a £469 million loss in the same period last year.

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RBS chief executive Ross McEwan (PA)

Shares in the state-backed lender climbed 4.8p to 285.8p, with chief executive Ross McEwan again signalling that the lender is moving on from its troubled past.

He said: “Our strategy to deliver a simpler, safer, customer-focused bank is working.

“We have grown income, reduced costs, made better use of our capital and continued to make progress on our legacy conduct issues.”

Across Europe, Spain’s Ibex was down 1.45% as the country faces a territorial showdown after Catalonia’s regional parliament voted to establish an independent republic.

In response, the Spanish Senate authorised the government to take control of the region.

A majority of senators gave prime minister Mariano Rajoy the go-ahead to apply unprecedented constitutional measures, including firing Catalan president Carles Puigdemont and his cabinet, and curtailing Catalan parliamentary powers.

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Spain Catalonia

David Madden, market analyst at CMC Markets UK, said: “The political outlook is very uncertain, and investors are getting more nervous by the minute.

“Investors will be reluctant to hold Spanish stocks over the weekend, for fear we could see a repeat of the violence that took place on the referendum day.”

Elsewhere, Germany’s Dax rose 0.6% and the Cac 40 in France was 0.7% higher.

On the currency markets, the pound was down 0.3% against the US dollar at 1.311, as a strong performance from the greenback was supported by better-than-expected figures for the US economy in the third quarter at 3%.

Sterling was also 0.3% higher versus the euro at 1.132 after the European Central Bank hinted that further monetary easing beyond September 2018 could be needed.

The price of oil hit its highest level since June 2015 after Saudi Arabia’s Crown Prince Mohammad bin Salman told Reuters that the nation “will support anything to stabilise the oil demand and supply”.

Brent crude surged 1.3% at 60 US dollars a barrel.

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A picture of a British Airways plane (PA)

In UK stocks, British Airways-owner International  Airlines Group (IAG) posted rising third-quarter profits, as the firm overcame the extreme weather and terrorism that has impacted the sector.

IAG, which owns BA, Iberia and Vueling, said operating profit before exceptional items rose 20.7% to 1.45 billion euro (£1.28 billion) in the three months to September 30.

Revenue rose 2% to 6.6 billion euro (£5.8 billion) as boss Willie Walsh hailed a “strong quarter”.

Pre-tax profit rose 22.5% to 1.43 billion euro (£1.26 billion) as the group was also helped by falling fuel costs.

However, shares slumped nearly 7%, closing down 46.5p to 623.5p.

The biggest risers on the FTSE 100 Index were Reckitt Benckiser up 205p to 6,845p, Experian up 43p to 1,598p, Compass Group up 38p to 1,638p, Merlin Entertainments 8.4p to 377.7p.

The biggest fallers were IAG down 46.5p to 623.5p, Berkeley Group down 137p to 3,807p, easyJet down 42p to 1,273p, Glencore down 11.6p to 367.2p.

Press Association

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