London afternoon: RBS leads retreat

7th May 2010 14:35

The market rally seen towards the end of the morning session fizzled out over lunch as London joined other European markets in retreat.Prime Minister Gordon Brown has moved into line with Liberal Democrat leader Nick Clegg and agreed that the Conservative party, which won the most seats in yesterday's general election but not enough to secure a majority of seats in the House of Commons, should have the first stab at forming a new government.Royal Bank of Scotland is sharply lower even though it moved into profit at the operating level during the first quarter of 2010 as impairment charges fell, although there was still a small pre-tax loss. Operating profit for the three months to 31 March was £713m compared with a £1.35bn loss a year ago, but the bank lost £21m before tax. Outsourcing specialists such as Capita and Serco are out of favour as the markets try to get to grips with what the election result will mean for public spending. Capita is especially hard hit after being downgraded by Shore Capital while KBC Peel Hunt has drawn attention to the recent comments by Capita's boss, Paul Pindar, who told KBC that a hung parliament would be the "worst possible outcome for the outsourcers as it would lead to months of indecision and would delay potential public sector outsourcing deals."Most of the day's firm features come from the mining sector, where Rio Tinto, Xstrata, BHP Billiton, Vedanta and Anglo American are the best performers.Index heavyweight HSBC is also doing its bit to bolster the index. The banking giant said it had a 'very good' start to 2010 that was well ahead of the same quarter the previous year. The bank's personal financial services and commercial banking divisions accounted for most of the improvement, HSBC said, with the global banking and markets division also ahead.BP says its 'coffer dam' has arrived at the site of the leak in the Gulf of Mexico and should be in place within two days as it attempts to stem the flow of oil from the crippled Deepwater Horizon rig. It may also need some sort of wall to protect it from the wave of writs heading its way for the tragedy. The Times reports that up to 200 American lawyers are planning a class action representing hundreds of individuals and businesses affected by the Gulf of Mexico spill.Underwriter Chaucer has estimated its net losses from the Deepwater Horizon rig disaster in the Gulf of Mexico at $25m. Rival underwriter Catlin estimated its exposure to Deepwater Horizon-related claims in second quarter at $40m net of reinsurance and reinstatements.Premier Oil has announced that Nexen, acting as operator, will plug and abandon the 15/23d-15 Bugle North Appraisal well in the North Sea.Most of British Airways' cabin crew have voted against a new offer which bosses hoped would bring a long-running dispute over pay and conditions to an end. The Unite union said of the 71% who voted, 81% were against the airline's proposals, in line with the its recommendation.ITV warned that the market outlook for the second half highly uncertain as it reported a 6% rise in revenues. The broadcaster's revenues in the first half increased to £450m compared with £425m last time. Broadcasting and online revenues were also up 6% to £390m, while ITV Studios external revenues rose 7% to £60m (2009: £56m), with internal production revenues at £73m (2009: £75m).Flight cancellations following last month's volcanic ash cloud from Iceland left passenger numbers at easyJet down 7.6% on April 2009 and 800,000 less than expected. The low-cost airline sold 3.49m tickets in April, down from 3.78m a year earlier, but the company had expected to fly 4.3m passengers, which would have represented growth of 14%.