Given that US banks were responsible for a 3.4% drop on Wall Street yesterday, it is surprising that some of their UK equivalents are helping support the London market in early trading.
With the FTSE 100 unsure of which direction to take - an early dip followed by a rise of a couple of points and then a dip again - most of the leading banking groups are in positive territory. Royal Bank of Scotland rose 0.9p to 22.1p amid talk it is considering the closure of some of its operations in China and the sale of some or all of its Australian businesses.
Meanwhile Lloyds Banking Group is up 0.8p to 57.6p but after an early bounce, Barclays is now down 1.3p at 97.4p, illustrating the fragile mood among investors. Chris Hossain, senior sales manager at spread betters ODL Securities said:
"Until investors feel that we have a clear and lucid way forward, we may struggle to break out of this market paralysis."
Overall the FTSE 100 is down 18.6 points at 3832.13, but this is not a bad performance considering the falls on Wall Street and in Asia.
Among the major fallers, 3i continues to lose ground after yesterday's downgrade by credit rating agency Standard & Poor's. It is down another 7.25p at 195p.
Engineering group Invensys has lost 7.1p to 146.3p after analysts at an advisor, Morgan Stanley, began coverage with a 135p price target and an underweight rating. They said:
"We believe earnings risk for 2010 is likely to dominate the debate on Invensys as our proprietary checks suggest significant cuts to capital expenditure for the oil and gas sector, the core end market for Process Systems. While the Rail Signalling business looks relatively defensive, we doubt it can offset the weakness in the rest of the group's portfolio."
But Dana Petroleum benefited from an upgrade from the same investment bank. Its shares are up 18.5p to 952.5p as Morgan Stanley raised its recommendation from equal weight to overweight. Analysts at Jeffries began coverage with a hold rating and a £10 price target, while the company also announced this morning the discovery of a new oil field in the Rinnes area of the North Sea.
