Market Report: City sees no reason to cheer Lloyds deal

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The prospect of Lloyds Banking Group doing its first deal since being rescued by taxpayers seven years ago did not sit well with the City today.

Shares in the bank, which received a £20 billion bailout in 2009, slipped 0.87p, or 1.5%, to 58.57p as it emerged the front runner for Bank of America’s British credit-card operations — a business worth an estimated £7 billion.

Now, back in profit and seeking opportunities in higher-margin areas, Lloyds is said to have become lead bidder for the MBNA unit after Bank of America agreed to shield the buyer from some future costs of compensation for PPI mis-selling.

Negotiations with another suitor, US private equity firm Cerberus, have reportedly broken down.

The FTSE 100 could only post a gain of 14.42 points to 6790.19 despite a rebound in commodities stocks as Brent crude and metals prices strengthened. Randgold Resources topped the index with a 120p rise to 5910p. BP put on 5.25p to 452.9p and Shell climbed 25.5p to 2010p.

Traders were likely focused on Wednesday’s Autumn Statement in the absence of momentum from elsewhere, Spreadex’s Connor Campbell said.

Over-fifties fashion retailer Bonmarché did, however, find its way to positive territory as new boss Helen Connolly vowed to rectify mistakes made under a previous regime that sent first-half same-store sales tumbling 8.6%.

She said “basic retail disciplines” had not been “sufficiently co-ordinated” and set out plans to modernise ranges and speed up turnaround times. Investec said Connolly’s was an “evolutionary strategy” and Bonmarché shares rose 2p to 91.5p. 


Improvement: Bonmarché boss Helen Connolly said new, more modern ranges were selling well (Bonmarche)

On the FTSE 250, recruiters PageGroup, up 7p to 371.7p, and Hays, 1.7p higher at 139.9p, each benefited from an HSBC upgrade to Buy.

But Essentra, a supplier of specialist plastic, fibre, foam and packaging products, tanked 101.4p to 392.9p after cutting full-year profit forecasts for the second time this year because of challenging conditions in the Chinese filter products market. It said operating profit would be between £137 million and £142 million rather than the previously forecast £155 million to £165 million.

Bos Global, a software firm that helps companies’ productivity, was the biggest winner on AIM. It rose 2p, or 41%, to 6.9p after striking a “transformational” global deal.

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November 22, 2016 |
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