The FTSE 100 Index fell below the 5,000 points mark
The FTSE 100 Index fell below the 5,000 points mark for the first time in a month as part-nationalised banks saw contrasting fortunes.
Lloyds Banking Group spent much of the session in positive territory after investors digested news of a £13.5 billion rights issue and improving conditions for bad debts.
But Royal Bank of Scotland declined 10% as it was confirmed the Government will raise its stake, while weak results from Swiss bank UBS further dented the sector.
The wider market was dragged lower by a weak session in Asia and a poor session for miners after the US dollar gained strength. By lunchtime, the Footsie was 87.2 points lower at 5017.3, having fallen as low as 4985 earlier in the session. Eurasian Natural Resources led the list of fallers in the mining sector, dropping 28p to 851p.
Lloyds was one of a handful of blue-chips in positive territory - up 0.1p to 85.1p - as investors welcomed its £21 billion fundraising plan and intention to escape the Government's asset protection scheme. But RBS lagged 3.8p at 34.9p after the Government confirmed plans to pump in an additional £25.5 billion and increase its stake in the bank to 84% as a result of the toxic debts scheme.
Other banks were also under pressure, with HSBC off 21.2p at 668.8p and Asian-facing Standard Chartered down 37.5p to 1485.5p. Barclays slid 11.3p to 318.7p as it also announced details of a major restructuring to its management team.
Defence and engineering giant Rolls-Royce was another heavy faller, losing 9.8p to 441.9p despite a steady-as-she-goes trading update in line with previous guidance. But chief executive Sir John Rose warned there was "no evidence yet of a sustained and general return to growth" across its markets.
The biggest rise in the FTSE 250 Index came from budget stores group Dunelm after it said like-for-like sales continued to run ahead of market expectations. The trading update prompted Numis Securities to raise its rating from add to buy and caused shares to jump 7% or 21.2p to 347.2p. The retail stock stood at 120p at the start of this year.
Meanwhile, AB Foods slipped 13p to 820p after it announced full-year results showing profits ahead by 4% to £655 million. Analysts said the results from the Primark owner were in line with expectations, although cautious comments from the company resulted in some pressure on the stock.
