London midday: Banks drift drags Footsie lower

10th Aug 2009 12:03

Banks are leading the Footsie lower amid talk that Lloyds is mulling a fund raising. Weekend reports said Lloyds Banking may raise up to £15bn from the stock market to keep down the cost of insuring toxic debt with the Government. The Treasury is understood to back the bank's tentative plans to raise cash from the markets and scale back its exposure to the Government's asset protection scheme. Royal Bank of Scotland is down in sympathy. Miners are also weak, with Rio Tinto, which China has accused of conducting a six-year spying campaign, among the fallers. Life insurer Friends Provident is leading the risers after saying it is now is close to agreeing a takeover by Resolution after the terms of the original offer were improved. In a statement, Friends Provident confirmed it had received a new offer of 0.9 Resolution shares for each Friends Provident share, worth about £1.85bn. The offer also includes a partial cash alternative up to £500m. Rio Tinto is also under pressure as the row with China over the detention of four of its employees and iron ore pricing is escalating rapidly. China has now accused Rio of spying on its steel industry for six years, costing the country Rmb700bn ($102bn) in excessive charges for iron ore. Construction and regeneration group Morgan Sindall said first half results were in line with expectations despite posting a 28% slide in profits due to the challenging conditions in the period. Profit before tax fell to £20.5m from £28.6m on revenue that slipped 8% to £1.14bn. Troubled Irish airline Aer Lingus carried 8.2% more passengers in July than last year as the number making short-haul journeys increased, though long-haul passenger numbers fell sharply and the load factor fell. Occupancy fell again at care home operator Southern Cross over the last three months with the average occupancy of the mature portfolio 87.5% (2008: 89.8%). Revenues in the 14 weeks to 5 July were £254.8m (2008: £245.6m) and operating profits £22.2m (2008: £24.4m). Operating margins were 31.8%, 0.2% lower than during the same period in the prior year. Recruitment firm Harvey Nash said trading in the six months to June has remained broadly in line with expectations underpinned by its broad portfolio of services. Revenue for the period is in line with the previous year while gross profit for the same period has recorded only a modest decline of 5%. Just Retirement has extended the timeframe within which Avalon would need to submit a firm offer proposal for the specialist life assurance group. Avalon, which made an approach for Just Retirement in June, now has until 25 September 2009 to make a bid.