London midday: Stocks pare gains as Credit Suisse resumes slide

London stocks had pared gains by midday on Friday as initial relief over a rescue of US bank First Republic waned, while Credit Suisse resumed its slide.

The FTSE 100 was up just 0.1% at 7,415.58.

On Thursday, 11 US lenders deposited $30bn with First Republic Bank in a show of support.

The banks involved are Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY Mellon, PNC Bank, State Street, Truist and US Bank.

In a statement, they said: "The actions of America’s largest banks reflect their confidence in the country’s banking system. Together, we are deploying our financial strength and liquidity into the larger system, where it is needed the most.

"Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities. America’s larger banks stand united with all banks to support our economy and all of those around us."

Sticking with banks, Credit Suisse was under the cosh as it was hit with a lawsuit by US investors alleging it overstated its financial prospects to shareholders.

The suit was filed by the Rosen Law Firm, which specialises in representing individual shareholders, and claims the bank made "materially false and misleading statements" in its 2021 annual report.

Russ Mould, investment director at AJ Bell, said: "Whether the efforts on the part of the Swiss government to prop up the bank prove sufficient, whether Wall Street’s injection into troubled regional institution First Republic overnight works, and whether there are any other vulnerable banks are likely to remain key considerations for investors. The dreaded c-word, contagion, certainly remains in the air.

"The pace and scale of the rate tightening cycle after a decade of virtually zero interest rates was always likely to reveal stresses and strains in the financial system but if central banks row back, they risk leaving inflation even more entrenched and fostering a sense of panic."

The latest projections from the OECD did little to boost the mood, meanwhile, as it said the UK will be the only industrialised country other than Russia to shrink this year.

It expects the UK economy to contract by 0.2%. This is better than its previous forecast for a 0.4% contraction but still leaves the UK at the bottom of the G7 league table.

In equity markets, miners were the standout gainers, with Anglo American, Glencore, Antofagasta and Rio Tinto all up as metals prices rose. Oil giants BP and Shell also gushed higher as oil prices rallied.

Bodycote surged after reporting a jump in full-year profit and revenue and lifting its dividend, as it said permanent price increases had fully recovered labour and general cost inflation.

Diploma advanced after it raised around £235m in a placing to help fund the acquisition of US-based Tennessee Industrial Electronics.

BT Group slumped as its Openreach business confirmed it will hold back the launch of its Equinox 2 pricing deal after Ofcom delayed the conclusion of its investigation into a new Openreach broadband pricing plan by two months.

In broker note action, GSK was boosted by an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank, while London Stock Exchange was lifted by upgrade to ‘buy’ at UBS.

Sage Group was a little weaker after a downgrade to ‘neutral’ at Exane.

Market Movers

FTSE 100 (UKX) 7,415.58 0.07%
FTSE 250 (MCX) 18,725.49 -0.18%
techMARK (TASX) 4,511.58 -0.11%

FTSE 100 - Risers

Glencore (GLEN) 432.15p 2.11%
Anglo American (AAL) 2,523.50p 1.80%
BP (BP.) 490.85p 1.74%
Shell (SHEL) 2,246.50p 1.70%
London Stock Exchange Group (LSEG) 7,440.00p 1.56%
Pershing Square Holdings Ltd NPV (PSH) 2,820.00p 1.44%
GSK (GSK) 1,405.20p 1.31%
Flutter Entertainment (CDI) (FLTR) 14,000.00p 1.23%
Experian (EXPN) 2,685.00p 1.21%
Imperial Brands (IMB) 1,882.50p 1.07%

FTSE 100 - Fallers

BT Group (BT.A) 141.55p -3.48%
Abrdn (ABDN) 205.30p -2.70%
United Utilities Group (UU.) 1,040.50p -2.30%
M&G (MNG) 177.75p -2.15%
Severn Trent (SVT) 2,789.00p -2.14%
Schroders (SDR) 442.10p -1.95%
Prudential (PRU) 1,030.50p -1.81%
Rentokil Initial (RTO) 544.00p -1.73%
JD Sports Fashion (JD.) 163.85p -1.71%
Ocado Group (OCDO) 428.20p -1.70%

FTSE 250 - Risers

Bodycote (BOY) 608.00p 4.56%
Tullow Oil (TLW) 30.02p 3.52%
Diploma (DPLM) 2,726.00p 3.41%
Quilter (QLT) 82.64p 2.84%
Hunting (HTG) 237.50p 2.81%
Herald Investment Trust (HRI) 1,784.00p 2.76%
Auction Technology Group (ATG) 647.00p 2.70%
Bank of Georgia Group (BGEO) 2,500.00p 2.46%
BlackRock World Mining Trust (BRWM) 643.00p 2.39%
JPMorgan European Discovery Trust (JEDT) 410.50p 2.37%

FTSE 250 - Fallers

Bridgepoint Group (Reg S) (BPT) 195.40p -9.29%
TI Fluid Systems (TIFS) 96.70p -4.45%
Currys (CURY) 62.25p -4.16%
Petershill Partners (PHLL) 151.20p -3.94%
Centamin (DI) (CEY) 97.40p -3.13%
Helios Towers (HTWS) 104.50p -3.06%
Shaftesbury Capital (SHC) 115.80p -3.02%
Moonpig Group (MOON) 113.20p -3.00%
easyJet (EZJ) 474.60p -2.61%
Ashmore Group (ASHM) 233.20p -2.59%