Barclays boost for banking shares

Barclays gave bank shares a boost as it unveiled better-than-expected profits of £6.1 billion in a strong start to the sector’s annual results season.

But the wider FTSE 100 Index closed in the red – down 23 points at 6037.1 – as miners dragged it lower and after weak US retail sales figures hit sentiment on Wall Street.

The Dow Jones Industrial Average was more than 50 points lower in early trade after the US Commerce Department said retail sales rose 0.3% last month – half of market expectations.

Investors in London were also nervy after official figures revealed another rise in inflation last month to 4% from 3.7% in December.

Inflation will also stay top of the agenda for Wednesday, with more insights due on the Bank of England’s stance on interest rates in its keenly-awaited quarterly forecast.

The inflation spike in January strengthened the pound as it heaped yet more pressure on the Bank to consider raising interest rates to calm inflation. Sterling rose to 1.61 dollars and just under 1.20 euros.

Among stocks, Barclays leapt to the top of the Footsie with a shares rise of 6% after reporting the 32% improvement in headline profits and revealing revenues up by a fifth at its investment banking division Barclays Capital in the final three months of 2010.

Barclays rose 18p to 328.8p and it gave a boost to others in the sector ahead of their full-year figures.

Lloyds Banking Group added 1.2p to 66.9p and fellow taxpayer-backed Royal Bank of Scotland lifted a penny to 45.3p.

Supermarket Morrisons was 5p dearer at 280p after unveiling the first major step in its e-commerce strategy with the acquisition of online retailer Kiddicare.