Warning from Barclays takes Footsie lower

Market report Emma Newlands

London’s top-flight index swung into the red as investors took a dim view of Barclays despite the banking giant posting a significant surge in profits.

The FTSE 100 Index was down 30.88 points to 7,271.37, as the lender saw group pre-tax profits soar to £3.2 billion, up from £1.1bn a year earlier, boosted by its investment banking arm. However, Barclays reversed early gains as shareholders baulked at warnings from chairman John Mcfarlane that “significant challenges remain”.

It comes as the bank fights US authorities over allegations surrounding its part in a mortgage bond mis-selling scandal, and its shares closed down more than 2 per cent or 6.1p to 229.1p.

Jasper Lawler, senior market analyst at London Capital Group, said: “A near-tripling of profits in 2016 and the early closure of its so-called ‘bad bank’, which housed its worst assets were the main reasons for the initially positive reception to Barclays’ results.”

On the currency markets, the pound pushed higher after the CBI’S latest quarterly Distributive Trades Survey cooled predictions of a slump in consumer demand. A balance of +9 per cent of retailers said sales volumes were up in February on a year ago. Sterling was up 0.7 per cent against the US dollar at $1.254 and was 0.5 per cent higher versus the euro at €1.185.

The biggest risers on the FTSE 100 Index included Intu properties, up 18.6p to 294p, RSA Insurance, up 28p to 605p, and Randgold Resources, up 160p to 7,595p.

Among the biggest fallers were Easyjet,down 59.5p to 914.5p, Rio Tinto, down 190p to 3,418p, and HSBC Holdings, down 26.9p to 652.8p. The coach operator rose after notching up a 10 per cent rise in profits last year thanks to ongoing strike action blighting rival Southern Rail. The Scottish Gas owner saw its shares tumble after revenues for 2016 dropped 3 per cent to £27.1 billion and it held off on dividend increases.