MARKET REPORT

THE London market failed to bounce back yesterday as investor fears over an impending US fine sent shares in Royal Bank of Scotland tumbling.

The FTSE 100 Index closed down 7.98 points to 7,244.41, with RBS unable to string together a rally despite reporting a bottom-line profit for the first time in a decade.

The lender swung out of the red to report a £752m profit for 2017, marking a major improvement on the £6.95bn loss which the lender reported a year ago – one of the biggest since its Government bailout in 2008.

RBS, which is 72% owned by the taxpayer, has yet to reach what is expected to be a multibillion-dollar settlement with the US Department of Justice (DOJ) over mortgagebacked securities sales.

Shares were down 4%, or 13.6p, to 268.4p.

Across Europe, Germany’s Dax and the Cac 40 in France were both 0.2% higher.

On the currency markets, the pound was 0.2% ahead against the US dollar at 1.397, with Bank of England official David Ramsden saying clarity over Britain’s relationship with the European Union after Brexit would boost productivity growth.

Mr Ramsden, deputy governor for markets and banking, warned that uncertainty surrounding the arrangements was causing businesses to put their investment plans on hold.

Versus the euro, sterling was up 0.4% at 1.136.

The price of oil surged 1.5% to 67.12 as traders responded to production slipping in Libya after the El Feel oilfield was shutdown.

Elsewhere in UK stocks, British Airways owner International Consolidated Airlines Group (IAG) dived into the red as traders demanded further signs of underlying growth. Shares sank 5%, or 35.4p, to 587.2p, despite profits soaring 15% in 2017 as the group benefited from a drop in fuel costs and strengthening economies in North and South America.

Telecoms giant BT enjoyed a brighter session, finishing as the top flight’s biggest riser after Ofcom stopped short of regulating BT Openreach’s fastest wholesale superfast broadband products. The group climbed 11.7p to 244.1p.

Other risers on the FTSE 100 Index United Utilities up 22.8p to 686.8p, Severn Trent up 56p to 1,766p, British American Tobacco up 105.5p to 4,460p.

The biggest fallers were IAG down 35.4p to 587.2p, Royal Bank of Scotland down 13.6p to 268.4p, Smurfit Kappa down 100p to 2,496p, BAE Systems down 20p to 565p.