Bank stock weakness drags London back into the red

London's leading share index fell into the red yesterday despitefigures confirming a stronger-than-expected economic recovery in the final quarter of 2009.

Positive economic news in the United States also failed to lift shares, with bank stocks acting as a drag on both sides of the Atlantic.

The FTSE 100 Index closed 38.34 points down at 5672.32, with little cheer offered from news that fourth-quarter UK output was upgraded from 0.3 per cent to 0.4 per cent.

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Banks weighed on the Footsie after it was revealed that Royal Bank of Scotland was facing a 28.6m fine from the Office of Fair Trading for revealing loan prices to rival Barclays two years ago.

Market experts said the sector was also coming under pressure following Monday's announcement that the US Government was looking to sell its massive holding in Citigroup.

Joshua Raymond, market strategist at City Index, said: "The fear is that the UK government, having seen equities rally enormously since the low of March in 2009, may now also be tempted into cashing in their stakes in Lloyds or RBS."

On Wall Street, stocks fell in spite of economic data showing US house prices saw their smallest annual decline in three years during January, while consumer confidence also grew more than expected in March.

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But mining stocks were among those making gains in London as a weaker dollar pushed up commodity prices.

Sterling edged near 1.51 against the greenback. The pound also rose to 1.13 euros.

Engineering and project management company Amec topped the Footsie

risers board after it announced the acquisition of environmental consultancy firm Entec Holdings for 61.2m. Entec Holdings has an office in Leeds. Amec shares rose 241/2p to 7901/2p, a gain of more than three per cent. Mobile phone giant Vodafone also continued to rise on speculation that it may soon gain dividends from its stake in US firm Verizon Wireless.

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Shares were up 1.05p to 152.2p after hitting a 21-month high earlier in the session.

The fallers board was littered with banks, led by RBS with a 1.52p drop to 43.26p after details of its Office of Fair Trading fine.

Barclays, which avoids a fine for being the whistleblower, was 8.85p down at 358p.

British Airways shed 6p to 245p after it revealed a 5.5m-a-day loss at the weekend due to the latest cabin crew strike, which ended yesterday.

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Outside the top flight, Domino's Pizza continued to impress investors after it reported like-for-like sales growth of 10.5 per cent in the 13 weeks to March 28, despite many stores being forced to close by the winter weather.

The group plans to open 55 new stores this year and is expected to be lifted by people ordering takeaways as they stay in to watch TV

coverage of events such as the World Cup in South Africa.

Numis Securities analyst Douglas Jack said: "The Domino's model is stronger than it has ever been."

Even so, the company has warned of much tougher sales comparisons in the second half of 2010.

Shares lifted 101/2p to 3451/2p.

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Meanwhile, Punch Taverns shares were three per cent higher – up 23/4p to 84p – after the company announced the departure of chief executive Giles Thorley following nine years at the helm of Britain's biggest pubs chain.

The biggest Footsie risers were Amec up 241/2p at 7901/2p, Legal & General ahead 1p at 88p, Schroders up 14p at 1414p and United Utilities ahead 5p at 567p.

The biggest Footsie faller was Inmarsat, which was down 45p at 7521/2p.