UK stocks closed lower on Friday during a relatively quiet session as banking stocks slipped following a bearish Goldman Sachs note and oil companies tracked softer crude prices. The FTSE100 closed 63.8 points to close at 5412.9 in thin trading as investors took a breather following the volatile data fuelled session on Thursday.
Goldman Sachs said in a note to clients that European banks might need to raise E60bn-E90bn if a turn in the credit cycle triggered losses comparable with those seen a decade ago. The brokerage also said it had lowered 2008-2010 estimates for over 40 banks and cut price targets on a number of them, including Barclays, RBS, Deutsche Bank and UBS. RBS, Barclays, HBOS, HSBC and Standard Chartered were down between 2.1 and 4.5 percent.
Bradford and Bingley lost 18 percent after the mortgage lenders said it planned to increase its rights issue to £400m after US private equity firm TPG Capital pulled out of a plan to buy a stake. Friends Provident topped the FTSE100 losers however, down 6.0 percent after a source familiar with the matter said late Thursday that Swiss Life is no longer considering a bid for Lombard, the high end insurance unit of the insurer. Friends Provident and Swiss Life both declined to comment.
Heavyweight oil stocks tracked falling commodity prices. US crude prices stayed within range of the record highs hit in the previous session of just under $146 a barrel. BP fell 1 percent and Royal Dutch Shell dipped 1.3 percent, while Tullow Oil fell 2.2 percent. Firm crude prices, fanned existing concerns about inflation, as price pressures threaten to jeopardise earnings and curb consumer spending.
An uncertain economic outlook also continued to cast a shadow over the British market. An annual discretionary income study, by Ernst and Young showed the average British household is now 15 percent worse off than it was five years ago.
Marks and Spencer was 3.8 percent lower after hitting their lowest since late 2001 as joint house broker Citi cut its rating to sell from buy and on soft weekly sales data from rival John Lewis. Some retail stocks rebounded however, with Tesco, WmMorrison and Sainsbury flat to 5.2 percent after being hit hard in recent session as traders said the shares offer short term value. Vague merger and acquisition hopes also buoyed the stocks, traders said.
The Nikkei average rose 0.9 percent today on a softer yen and gains in other Asian markets, breaking its longest losing streak in more than half a century. Trend Micro jumped 3.2 percent on a brokerage upgrade that cited a strong second quarter outlook of the computer security software maker. The Nikkei ended up 122.15 points to close at 13360.04, the first gain after 12 days of losses.