FTSE in black as GDP data outweighs Lloyds' update

Shares in the bank – 41 per cent owned by the taxpayer – declined more than 4 per cent, or 23/8p to 521/2p after it racked up a staggering 24bn in bad debts, mainly stemming from rescued bank HBOS.

Lloyds was the leading faller in the FTSE 100 Index, which finished 76.30 points, or 1.4 per cent higher at 5354.52 after solid economic data on both sides of the Atlantic managed to shore up investor confidence.

UK output figures showed better than expected 0.3 per cent growth during the final quarter of 2009, while the US government said GDP grew at an annual pace of 5.9 per cent, above the previous estimate of 5.7 per cent.

But US stocks were mixed after insurer AIG reported a larger than expected fourth-quarter loss, while there was more disappointing data from the US housing market for January.

While the US economy rebounded strongly in the second half of 2009 from the worst downturn since the 1930s, data so far suggests the rapid rate of acceleration slowed somewhat in the first quarter of 2010.

Sales of existing homes dropped 7.2 per cent to an annual rate of 5.05 million units last month, the National Association of Realtors said, sharply below market expectations for a 5.5 million unit pace.

In the final three months of 2009, consumer spending increased at a 1.7 per cent rate, below the 2.8 per cent rate in the prior quarter when consumption got a boost from the US government's 'cash for bangers' auto purchase programme.

The pound continued to struggle against the dollar despite the GDP figures, as concerns over the poor state of the public finances and the prospect of a hung parliament overrode any relief at the stronger than expected growth. Firmer metal prices meant miners were well represented among the Footsie risers, with Vedanta Resources advancing 84p to 2548p, and Anglo American 831/2 points ahead to stand at 2390p.

Outsourcing firm Serco led the way after full-year profits grew by 30 per cent and it increased its dividend by a quarter. Shares responded with a 6 per cent increase, ahead 32p to 5531/2p. Insurance firm Aviva followed close behind with a 171/4p gain to 3901/4p despite ING brokers cutting their target price on the firm ahead of next week's results. ING expects a dividend cut and said the group faced increasing challenges in its core business.

Lloyds topped the fallers' board although analysts said there were some encouraging signs after the trend for bad debts improved in the second half of the year.

Royal Bank of Scotland also dropped 3/4p to 375/8p, or 2 per cent, following its own results on Thursday, where a lower than expected annual loss triggered a 6 per cent share rise.

Telecoms firms were meanwhile having a tricky session, with Vodafone declining 7/8p to 1411/2p, BT down 25/8p to 1147/8p and Cable & Wireless sliding 1/2p to 1363/8p.

Property website Rightmove was the biggest FTSE 250 riser, powering ahead 37p to 635p, or 6 per cent, as brokers reviewed their forecasts following Thursday's better than expected results.

It was followed higher in the second tier by Misys, which provides IT services to the banking industry. Morgan Stanley lifted its target price on the stock, helping shares up 13p to stand at 2273/4p.

The biggest Footsie risers were Serco, Aviva, Old Mutual up 41/8p to 1133/8p and Rolls-Royce ahead 191/2p to 558p.

The biggest Footsie fallers were Lloyds, BT, RBS and British Land off 45/8p to 440p.