BRADFORD & Bingley prompted another slide in banking shares in London yesterday after making a U-turn on a rights issue.
The Bingley-based mortgage lender, a member of the FTSE 250 index, said only a month ago it did not need fresh capital, but ye
sterday unveiled plans for a £300 million rights issue.
Its shares, which have fallen by two-thirds over the past year, dropped 9.1 per cent to 144.25p and weighed on peers.
Edinburgh-based HBOS, Britain's biggest mortgage lender, slid by 3 per cent to 470.25p, while Alliance & Leicester, rumoured to be on the verge of a rights issue of its own, closed down 13p at 445.75p.
Royal Bank of Scotland, which had its £12 billion rights issue approved by shareholders yesterday, dropped 18.5p to 319.25p, while Barclays, also believed to be contemplating a rights issue, fell 2.4 per cent to 427.25p.
Despite the falls in the heavyweight banking sector, and comments from the Bank of England that dampened hopes of significant interest rate cuts, the FTSE 100 index closed up 4.1 points at 6,216.0 points.
The index was boosted by the mining sector and a strong start to trading in New York.
Miners' gains were fuelled by rumours that a state-run Chinese company was building a stake in BHP Billiton. BHP jumped 98p to 2,118p on the Chinalco rumours, while Eurasian Natural Resources rose 99p to 1,476p after the Kazakh company said commodity prices had boosted first quarter profits.
FirstGroup, the Aberdeen-based transport company, led the FTSE 100 fallers' board despite posting a 40.6 per cent increase in Ebitda yesterday. The shares plunged by as much as 9 per cent after the company revealed a £240m shares placement to institutional investors to strengthen its balance sheet. It recovered some of the losses to close down 6.3 per cent or 37.5p at 561.5p.
Several other travel groups were also hit by rising fuel costs as oil continued to trade above $125 a barrel. British Airways tumbled a further 10.5p to 218p, while EasyJet fell 8p to 279.75p.
Cruise ship giant Carnival hit choppy waters, easing 59p to 1,981p.
Investors in supermarket group Sainsbury's took profits as the company reported profits in line with expectations. The shares fell 15.25p to 374.5p.
Other retailers were on the back foot amid the gloomy sentiment, with B&Q owner Kingfisher closing down 2.6p to 145.9p.
Catering firm Compass was rising, however, after it said that despite food inflation it had managed to increase its profit markets. Its shares gained 15.75p to 358p.
Housebuilders were falling again yesterday, hit by fading hopes of continuing interest rate cuts. Persimmon was the hardest hit, falling 30p to 550.5p while Wolseley, which provides construction materials, slipped 9.5p to 554p.
The full article contains 503 words and appears in The Scotsman newspaper.
