Monday February 23, 09:31 AM
Glance-Citi plan calms investors, bolsters FTSE
By Simon Falush
LONDON, Feb 23 (Reuters) - Britain's top share index rose
1.4 percent early on Monday, as a report that the U.S.
government could end up owning as much as 40 percent of
Citigroup (NYSE: C
- news) calmed nervous investors, bolstering banks and
commodity stocks.
By 0905 GMT the FTSE 100 had gained 53.04 points to
3,942.10, recovering a chunk of its 3.2 percent fall on Friday,
which took last week's loss to 7.2 percent.
The UK blue chip closed below the 4,000 level for the first
time in three months on Friday, led lower by weak commodity
stocks and banks, on concerns that the global recession is
deepening.
The U.S. Treasury on Sunday declined comment on reports that
Citigroup was in talks that could result in the government
taking a 40 percent stake in the company, but the department
said it was open to converting preferred shares into common
equity to strengthen banks.
This news improved risk aversion and allayed fears that the
U.S. bank may be completely nationalised, resulting in investors
moving back into financial stocks, which had taken a battering
last week on growing jitters about the health of the financial
system.
'Banks remain in focus, they are pivotal in terms of the
market,' said Jeremy Batstone-Carr, analyst at Charles Stanley.
'Efforts to ring-fence toxic assets at RBS (LSE: RBS.L - news) and the fact
there appears to be no all-out nationalisation of Citi is
steadying the ship.'
Royal Bank of Scotland was the top gainer on the
blue-chip index, up 17.6 percent after a banking source said on
Sunday that it is to announce a restructuring this week to
create a non-core division into which unwanted assets will be
placed.
Britain's state-owned Northern Rock (LSE: GB0001452795.L - news) bank plans to increase
its mortgage lending by up to 14 billion pounds over the next
two years, a Treasury official said on Sunday.
The plan to get Northern Rock lending again is part of a
series of initiatives expected this week, designed to get credit
in Britain flowing again after the economy shrank by 1.5 percent
in the last three months of 2008.
Other banks were also strong gainers with Barclays (LSE: BARC.L - news) ,
HSBC (LSE: HSBA.L - news) and Lloyds Banking Group up between 1.8
and 9.5 percent.
Energy and mining stocks also buoyed the blue-chip index as
metals and crude prices firmed slightly.
BP (LSE: BP.L - news) , BG Group (LSE: BG.L - news) , Cairn Energy (LSE: CNE.L - news) and Royal
Dutch Shell gained 0.9 to 1.7 percent while Anglo
American, BHP Billiton (LSE: BLT.L - news) and Xstrata (LSE: XTA.L - news) added
1.0 to 3.2 percent.
Rio Tinto (LSE: RIO.L - news) gained 1.1 percent after a newspaper said
it would try to persuade irate shareholders to back a $19.5
billion tie-up with Chinalco by offering them bonds on the same
terms as Chinalco.
Prudential gained 3.9 percent after the Sunday
Telegraph reported that Clive Cowdery, the entrepreneur founder
of the financial buy-out firm Resolution, has approached
the insurer to assess its interest in selling its UK operations.
This helped lift peers Legal & General and Aviva (LSE: AV.L - news) 9.2
and 4.7 percent higher respectively.
(Reporting by Simon Falush; editing by Simon Jessop)
* For related prices, Reuters Terminal users may click on - * UK stock report FTSE index: techMARK 100 index: FTSE futures: Gilt futures: Smallcap index: FTSE 250 (news) index: FTSE 350 index: Market digest: Top 10 by vol: Top price gainers: Top % gainers: Top price losers: Top % losers: * For related news, click on - * UK hot stocks: Wall Street: Gilts report: Euro bond report Pan European stock report: Tokyo stocks: HK stocks: Sterling report: Dollar report: * For company prices, click on - * Company (CPNY3.SA - news) directory: By sector: * For pan-European market data and news, click on - * Daily European stocks report........................ European Equities speed guide................ FTSE Eurotop 300 index........................... DJ STOXX index................................... Top 10 STOXX sectors........................ Top 10 EUROSTOXX sectors................... Top 10 Eurotop 300 sectors.................. Top 25 European pct gainers.................... Top 25 European pct losers..................... Keywords: MARKETS BRITAIN STOCKS =2
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