London run ends as bank boss changes fail to excite

News of changes at the top of banking giants Barclays and HSBC received a lukewarm response from investors yesterday as the wider market ended its recent strong run.

Bob Diamond's promotion to replace John Varley as chief executive of Barclays failed to boost shares, while HSBC also slipped into the red after it announced chairman Stephen Green was to become the

Government's new Minister for Trade and Investment.

Fresh concerns over the eurozone brought the Footsie's rally to an end, with the index closing down 31.37 points at 5407.82 – the first finish in the red for seven sessions.

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Wall Street's Dow Jones fell almost 1 per cent in early trading after official figures showed a bigger-than-expected drop in German manufacturing orders in July of 2.2 per cent month-on-month.

Markets on both sides of the Atlantic were also unnerved by a report in the Wall Street Journal which claimed the EU stress tests of 91 banks in July understated some lenders' holdings of potentially risky debt.

Germany's banking association said the country's 10 biggest banks may need 105 billion euros ($134bn) in new capital as regulators revamp rules designed to prevent future crises.

"There's concern about the health of the European banking sector... that fear kind of comes and goes," said Tom Schrader, managing director, US equity trading at Stifel Nicolaus Capital Markets in Baltimore.

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"If the banks in England get a cold, it's certainly going to cause the banks here to sneeze," he added.

US traders said volume was light following the US Labor Day holiday. Decliners topped advancers by about five to two on the New York Stock Exchange.

The pound gained ground on a weak euro, up 0.5 per cent to 1.20 euros, but ongoing concerns over the strength of the UK economy hampered progress against the greenback, down 0.3 per cent to 1.53 dollars.

The high profile promotions and departures in the banking sector dominated the stock market in London.

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The appointment of American-born Barclays Capital boss Mr Diamond to the helm was met with caution in the City amid worries it could increase emphasis on the riskier investment banking operation.

Barclays saw shares drop 3 per cent, or 87/8p to 314p.

HSBC shares initially saw a good run after Mr Green announced his departure, but they later slid 3/8p to 6623/8p.

Meanwhile, a cautious note on the retail sector from brokers at HSBC meant a number of stocks in the sector were under pressure.

HSBC lowered its price targets on Next and Home Retail Group, which fell 19p to 2033p and 45/8p to 2221/2p respectively, while Marks & Spencer was 55/8p cheaper at 3541/8p.

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A shortened risers' board featured supermarket chain Morrisons, which lifted 15/8p to 291p ahead of half-year results due on Thursday.

Elsewhere, shares in online grocery firm Ocado remained under pressure after the recently-listed company disappointed its investors with a smaller than expected rise in third quarter sales.

Shares, which floated at 180p in July and fell to 130p last month, were down 11p to 146p, a drop of 7 per cent, as Clive Black of Shore Capital said he did not expect Ocado to make any "meaningful" profits for at least another five years.

And Connaught shareholders were left fearing the worst yesterday after the social housing firm requested a suspension in trading of its shares and said lenders had refused to provide further cash.

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Shares have fallen by more than 90 per cent to just over 16p.

The biggest Footsie risers were Invensys up 185/8p to 2691/4p and Tullow Oil ahead 46p to 1228p.

The biggest fallers were Man Group off 93/4p to 2253/4p and C&W Worldwide down 25/8p to 701/8p.