Stockmarkets drop as optimism fades

26 February 2009

London markets have taken a turn for the worse as yesterday's optimism over the government's banking sector insurance scheme faded amid worse-than-expected results from Lloyds. 

The FTSE 100 slumped 64 points to 3851 with banks losing ground and healthcare firms and pharmaceuticals falling amid US plans to shake-up its healthcare system.

Banks were in a more subdued mood following their soaring gains on Friday. Lloyds fell 20% to 59.7p after reporting losses of £10.8 billion for 2008 at merger partner HBOS and reporting worse-than-expected profits of £840 million at its Lloyds TSB arm. It is yet to confirm details of its participation in the government's Asset Protection Scheme.

Rival Barclays and Royal Bank of Scotland were also giving up some of yesterday's gains, down 10% to 101.6p and 13% to 25.1p respectively.

Betting chain William Hill was in negative territory after confirming it will launch a fully underwritten one-for-one rights issue at a price of 105p to raise £350 million. This will increase the number of shares in issue by 50%. It also intends to scrap its final dividend as part of a £840 million restructuring. Shares in the group fell more almost 5% to 234.75p. 

Oil exploration group BG has upped its recommended all-cash takeover offer for pure Energy Resources to $8.25 a share from its previous bid of $8 a share. It still requires approval from 90% of shareholders. The group's shares were trading flat at 1,012p.

Property website Rightmove saw pre-tax profits lift to £25.5 million from £18.6 million with revenue up 31% to £74 million. It also boosted its dividend by a quarter to 25p. However it warned that the troubled property market will impact business in the coming year. 'Despite the strength of our 2008 performance, the housing market downturn and the credit crunch has been and will continue to be too pronounced to insulate Rightmove,' it said. Its shares climbed almost 5% to 217.75p.

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