Footsie dips despite Barclays beating forecasts with 32% rise in earnings

FTSE: 6,037.08 (–23.01) Mid-250: 11,749.72 (–84.22) Small Cap: 3,289.24 (–1.52)FORECAST-BEATING annual profit from Barclays brought some relief to London's banking sector yesterday, bringing financial stocks on to the FTSE 100's leaderboard.

The bank reported a 32 per cent rise in full-year earnings of £6.1 billion, up from £4.6 billion a year ago and stronger than consensus forecasts of £5.7 billion.

The numbers benefited from a 30 per cent fall in impairment charges from bad debts, which totalled £5.7 billion.

The strength of the bottom line number was enough to send Barclays stock soaring 4 per cent to 323.28p, its best closing level since September. It was the strongest showing on the benchmark index.

Lloyds Banking was up 2.3 per cent to 67.2p. Royal Bank of Scotland was also ahead 2.2 per cent to 45.25p.

“Barclays have kicked off reporting season for the banks with a solid set of full-year numbers,” said Manoj Ladwa, senior trader at ETX Capital. “Having stuck to his guns in front of the Treasury select committee two weeks ago, Bob Diamond seems to have hit the right note with investors as the bank reported well across the board.”

But the market’s overall gain was kept modest by losses in the mining sector. The biggest single decline in the sector and on the index came from Antofagasta, down 3.9 per cent at £14.28.

Overall, London’s benchmark index slipped 23 points to 6,037.08.

Sandy Jadeja, chief technical analyst at City Index, said: “Although the indices have performed nicely over recent weeks, the current development may be an early warning signal. Right now the FTSE 100 seems to be creating a . . . pattern which could potentially suggest that a top may be forming at current price levels.”

Lower down the market, a profit warning from software group Micro Focus International sent its shares down 29.3 per cent to 291p and the bottom of the FTSE 250. The company said “challenging” sales levels to the US federal government had contributed to its problems.

There was a sanguine market reaction to news that UK price inflation had reached 4 per cent in January as traders had been expecting such a high reading, double the Bank of England’s target. – (Copyright The Financial Times Limited 2011)