A strong performance by banking shares, led by Royal Bank of Scotland and Barclays, has pushed the market back into positive territory, albeit marginally.
RBS - pushed yesterday by Exane BNP Paribas and also lifted by talk that Brazil's Itau Unibanco might take a stake - is up another 2.5p at 34.6p while Barclays is 8.4p better at 288.95 as traders heard talk the bank may be raising its guidance. A positive note on Barclays from Deutsche Bank also helped. Deutsche analysts said:
Barclays offers both growth and recovery potential, and at a discounted valuation. Growth over time should come from the expansion of cash equities, M&A, and prime brokerage in Europe and Asia. Barclays also offers recovery potential via better net interest margins and loan losses in the retail and commercial banking operations. In 2009 we expect Barclaycard and Global Retail and Commercial Banking to generate profit before tax of £2.3bn, depressed by impairments around £1.2bn higher, and net interest income more than £1bn lower, than normal. We expect 2012 profit before tax of £4.5bn, adding around 14p a share to earnings per share.
Lloyds Banking Group - where Deutsche also has a buy recommendation - is up 1.24p at 53.5p. With the strength in the banks, the FTSE 100 has recovered somewhat from earlier weakness and is now up 3.34 points at 5503.68.
