FTSE falls as financials falter

Britain's leading share index stuttered on Thursday as weakness in the financial stocks weighed heavily on the FTSE 100 with a fall of 0.8 per cent by 11.13 BST to reach 5937. The drop follows a day of poor trading on Wednesday when the blue chips sunk by 1.6 per cent.

Chris Bradshaw
shareprices.com - Thursday, May 05, 2011

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One of the main culprits for the decline on Thursday was the financial sector, as disappointing reports from both Schroders and Lloyds dented confidence around the stocks. Lloyds Banking Group was a heavy casualty of the day after setting aside a chunk of its profits worth £3.2 billion to pay for the PPI mis-selling fiasco. The impact of the compensation payout left Lloyds in tatters with its share price tumbling by 8.6 per cent. Schroders also failed to impress traders with its first quarter report, with the investment manager disappointing the market by announcing losses and subsequently suffering a 6.3 per cent drop.

However, not all first quarter results were quite as catastrophic with several companies reporting strong results.

One of the firms trading well was Smith&Nephew, having shrugged off the recent disappointment over the lack of bid interest from Johnson and Johnson, posting firm first quarter results and climbing by 2.6 per cent. The artificial joint manufacturer has consistently performed well and the profits from the year so far led to Investec Securities upping its rating to 'buy'.

Drinks maker Diageo and can manufacturer Rexam both also performed well, with rises of 1.4 and 1.3 per cent respectively after reporting forecast-beating sales growth in the first three months.

Morrisons were another company to surpass sales expectations, despite the difficult retail climate at present, pushing the share price up by 0.7 per cent.

 

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