Bank gains increase City's hold on positive territory

Part-nationalised Lloyds Banking Group led the charge with a gain of nine per cent while Royal Bank of Scotland and Barclays soared eight per cent as investors cheered the prospect of more lenient restrictions on capital standards in the sector.

With decent results from UBS helping the positive sentiment, the FTSE 100 Index rose 14.55 points to 5365.67 despite huge second-quarter losses for oil giant BP.

Wall Street's Dow Jones Industrial Average struggled to make headway as figures showed consumer confidence at its lowest since February, which offset more decent earnings figures – this time from chemicals giant DuPont.

The pound hit a fresh five month high against the dollar – to more than $1.55 – as sterling continued to strengthen, helped by robust UK retail sales.

But it was BP in London grabbing the headlines once more.

Shares fell 10.95p to 406p after it plunged into the red for the first time in 18 years following a massive $32.2bn (20.8bn) provision for the Gulf of Mexico oil spill.

Investors also had to digest the resignation of chief executive Tony Hayward and details of the company's plans to sell $30bn in assets as it looks to concentrate on the higher-growth areas of exploration and production.

But fresh from its clean bill of health after last week's European stress tests, UK bank stocks were making the running.

Barclays jumped 23.9p to 339.55p, while Lloyds Banking Group lifted 5.8p to 71.8p and Royal Bank of Scotland was up 3.68p to 50.35p.

There was also a rise of 25p to 5521/2p for insurer Prudential and a gain of 8.4p to 3631/2p for rival Aviva.

The biggest fall in the top flight came from InterContinental Hotels after the billionaire Barclay brothers offloaded their 10 per cent stake in the company. The stock fell seven per cent, or 89p to 1110p, after the placing by Barclays Capital on behalf of the brothers, who own the Ritz hotel and the Daily Telegraph.

Outside the top flight, Halfords shares fell four per cent after it reported a 2.1 per cent drop in first quarter like-for-like sales, in part due to one-off factors such as the World Cup and political uncertainty.

The figure was higher than the 1.5 per cent decline expected in the

City and meant the stock fell 18.7p to close at 497.8p.

Chief executive David Wild said: "The resilience of the Halfords business model is confirmed by further like-for-like growth in our core categories despite the consumer headwinds experienced across the retail sector."

And Singer analyst Mark Photiades commented: "Despite this short term disruption management believe they are on track to deliver full year profit expectations and our view remains that the core Halfords retail business looks well positioned with its defensive, needs-driven offer."

He stuck by his forecast for full-year profits in the region of 136m.

There was also a drop of four for Imperial Leather soap firm PZ Cussons, even though it posted a 15 per cent rise in full-year profits to 101.8m.

Shares were under pressure – off 16.1p at 343.9p – as a result of the company's cautious comments about trading prospects.

Meanwhile social housing firm Connaught, which slumped 69 per cent on Monday thanks to funding concerns, bounced back seven per cent or 2.24p to 33.7p.

The biggest Footsie risers were Lloyds Banking Group ahead 5.8p to 71.8p, Royal Bank of Scotland up 3.7p to 50.4p and Barclays up 23.9p to 339.6p.

The biggest Footsie faller was Intercontinental Hotels down 89p at 1110p.