It's proving to be another nervy day for investors. Wall Street slumped 237 points overnight on continuing worries about the credit crunch, and the FTSE 100 is so far struggling for direction
On the positive side, news that Citigroup is raising $7.5bn by selling a 4.9% stake to the Abu Dhabi Investment Fund sent Dow Jones futures higher.
Closer to home Barclays added 21p to 518p after it indicated in a trading statement it was on course to meet analysts' expectations for its 2007 profits. Barclays is, of course, one of the banks which has been hard hit by speculation as to the extent of its exposure to loans stemming from the troubled US sub-prime market.
But the market failed to hold on to its gains as credit crunch worries returned. For a start, the idea of Citi needing to beef up its balance sheet with support from Abu Dhabi indicated the extent of the problem. The convertible securities Abu Dhabi is buying pay a fixed coupon of 11% a year, which by any measure seems a hefty amount.
And at Barclays, some analysts were less than impressed with the bank's statement. Panmure Gordon issued a sell note saying: "Our main concern remains the prospect of further mark-to-market charges at BarCap, especially compared with the sharp markdowns recognised by Swiss Re recently.
"In particular, we think Barclays could face further write-downs on its £5bn ABS CDO
portfolio (given that Swiss Re wrote its ABS CDOs down to zero, and given the further
negative newsflow on ABS/CDO downgrades), as well as the £5.4bn sub-prime mortgage book (especially given the rate cap loan restructuring programme announced by California)."
To be fair, though, both Collins Stewart and KBW were more positive on the Barclays statement.
Still, after falling nearly 50 points, then bouncing back nearly 20 points, the FTSE 100 is now down 12.5 points at 6168.0.
Northern Rock has bounced another 4.8p to 114.9p awaiting further bid developments.
Among other notable features, Associated British Foods is down around 2% after UBS downgraded from buy to neutral. Insurance group Benfield added nearly 6% after ABN Amro yesterday speculated that US broker Aon could be about to launch a bid.
Mike Ashley's Sports Direct added 2.5p to 99.5p after yesterday's news the company wants permission to buy back more shares. More on that anon.
