Miners, financials and RBS gain but Lloyds down after scrapping PPI

Banks and wider financial stocks have continued on a third day of strong rallies today as the sector continues to boom off the back of the strong stress test results on banks last Friday and the Basel committee’s willingness to loosen the regulatory noose on Europe’s main lenders by softening its proposals to hike up bank capital and liquidity rules. Lloyds Banking Group (LON:LLOY) appears to be the exemption with the share price declining after the group was the first bank to cease selling Payment Protection Insurance (PPI) announced in a statement yesterday. Mining stocks are back onto the strong foot after a strong performance in Asia overnight has beefed up demand.

Kate Neilson
shareprices.com - Wednesday, July 28, 2010

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RBS is the leading gainer on the FTSE 100

Royal Bank of Scotland (LON:RBS), HSBC Holdings (LON:HSBA), Standard Chartered (LON:STAN) and Barclays (LON:BARC) are all still revelling from the positive stress test results and a recent upgrade in strategy rating by Deutsche Bank to ‘neutral’ from ‘overweight’. RBS is the standout stock, up 1.5p to lift the share price well above the 50p line to 51.85p – a three per cent gain for the session so far.

The one major player missing from the list is Lloyds Banking Group. The part-nationalised bank became the first to scrap PPI yesterday following hoards of criticism of the protection product. Investors reacted positively to the decision on Tuesday but have shied-away from the stock today, for the meantime, dropping it into negative territory with a current decline of 0.5 per cent.

Another sector gaining widely as a whole is miners. Stronger metal prices and a strong performance on Asian markets overnight have urged the stocks higher. Xstrata (LON:XTA) is the most notable stock, up over 2.5 per cent. Anglo American (LON:AAL), BHP Bilton (LON:BLT), Rio Tinto (LON:RIO), Vedanta Resources (LON:VED), Fresnillo (LON:FRES) and Kazakhmys (LON:KAZ) are all gaining in the region of 2.5 per cent and 1.3 per cent. Lonmin (LON:LMI) is the only major player not positing gains with the group announcing last week it was having to payout £11.5m to competitors for the refining of its platinum after having to shut down a leaking furnace. Reports suggest that Xstrata may look to make a takeover move again for the group with the share price now lower after it failed to take over the company in 2008.

Insurance stocks also continued positive progression, benefitting from firmer equity markets and wider financial stocks including real estate investment firm Hammerson (LON:HMSO) also moved higher.

At the opposite end of the FTSE 100, Invensys (LON:ISYS) is down 5.5 per cent after the engineering groups’ trading update heightened concerns over its rail divisions performance for Nomura.

Scottish & Southern Energy (LON:SSE) traded ex-dividend and has fallen 3.5 per cent, drinks can maker Rexam (LON:REX) fell 2.6 per cent on a cautious outlook report and gas distributor Centrica (LON:CNA) dripped two per cent as it released a quarterly report saying rising wholesale gas prices would result in a weaker performance in the second half of the year.

The FTSE 100 index as a whole is up eight points to 5,374.02 – a gain of 0.16 per cent at 10:20BST.

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