Banks rally despite RBS £3.1bn hit

Investors were undeterred by the Royal Bank of Scotland’s (RBS) decision to put aside £3.1bn to settle claims that it mis-sold mortgage-backed securities in the US before the financial crisis.

It also said it would record a ninth consecutive annual loss.

Surprisingly, banking giants Lloyds (LLOY) and Barclays (BARC) gained by up to 2% on the news, helping the FTSE to nudge 0.2% higher to 7,178.

The UK economy grew by 0.6% between October and December, which was the same growth rate over the previous two quarters, according to the Office of National Statistics.

Business services and finance helped to boost the services sector by 0.3% over the same period, while borrowing rose in December.

However, the British Bankers’ Association said demand could soften in 2017 on expectations of higher interest rates.

West Texas Intermediate was 0.4% higher at $53 and Brent crude oil advanced 0.6% to $55.40 per barrel, respectively.

Gold and copper were flat at $1,196 per ounce and $5,952 per tonne, respectively.

In US markets, the Dow Jones last night remained above its record-breaking 20,000 mark while the S&P 500 jumped 0.8% to 2,298.

Tokyo’s Nikkei 225 and Hong Kong’s Hang Seng index rallied by at least 1.4%, while Shanghai’s SSE Composite index nudged 0.3% higher.

FTSE 100 RISERS AND FALLERS

Marmite supplier Unilever (ULVR) struggled with weaker-than-expected fourth quarter organic sales growth of 2.2%, which was affected by slowing emerging markets growth. Chief executive Paul Polman warned investors the company expects ‘a slow start’ to 2017, with growth improving as the year progresses.

Smirnoff maker Diageo (DGE) delivered better-than-expected first half results with organic volume growth of 4.4% ahead of expectations of 3.1%. The company celebrated a better performance in US spirits businesses, including the Johnnie Walker brand.

NOWTV and broadband provider Sky (SKY) was flat despite reporting that more UK customers were leaving its service, as its churn rate rose from 10.2% in the first half of 2016 to 11.6% in the first half of 2017. Management plan to replicate Sky’s Italian loyalty programme in the UK to reduce the number of customers leaving.

Costa Coffee and Beefeater owner Whitbread (WTB) revealed like-for-like sales in the 13 weeks to 1 December slumped by 1.5% as it struggled in a ‘soft pub restaurant market’.

FTSE 250 RISERS AND FALLERS

Spread betting firm CMC Markets (CMCX) suffered a decline in third quarter revenue per client. Chief executive Peter Cruddas admitted regulatory changes this year would ‘present the group with some short to medium-term challenges as clients and the industry adjust’.

Budget-friendly cards retailer Card Factory (CARD) unwrapped good results due to strong Christmas trading. The retailer’s like-for-like store sales returned to growth in the fourth quarter in the face of a tough prior year comparative.

An 11.7% increase in parcel volumes boosted payments-to-delivery services company PayPoint (PAY).

Luxury heels maker Jimmy Choo (CHOO) stepped into the limelight after reporting another year of record sales for the year to December. This reflected strong growth in Asia, solid growth in Europe and Japan and improving trends in its US retail business.

SMALL CAP RISERS AND FALLERS

Community care property partner Ashley House (ASH) was the biggest small cap faller as it continued to wait for clarity concerning the Government’s proposal to top up housing benefit to fund supported housing. Shares in the firm plummeted 18%.

Nu-Oil (NUOG) announced that investee firm MFDevCom would collaborate with COSL Drilling Pan Pacific to secure more projects earlier and cost-effectively.

Copper miner Weatherly International (WTI) reiterated it probably wouldn’t generate enough cash to repay loans if copper prices remained at current levels. Shareholders were worried about yet another potential fundraising and rushed to sell, causing the stock to fall 12.8%.

Gold miner Keras Resources (KRS) raised £600,000 in a shares placing to support ongoing exploration work at its Klondyke project in Western Australia.

Story provided by StockMarketWire.com