One eye on America as UK bank shares continue on their freefall.

January 20th, 2009 by admin | Filed under Daily News, Global Credit Crisis, Money Management, Mortgages, Recession, Saving, Stocks and shares, UK Bank Accounts, UK Banks, UK Credit Cards, UK Small Business.

It was difficult to dispel the feelings of despondency in UK financial circles yesterday as more and more eyes were being cast on America and today’s inauguration ceremonies for new President Barack Obama. It was difficult to dispel the feelings of despondency in UK financial circles yesterday as more and more eyes were being cast on America and today’s inauguration ceremonies for new President Barack Obama. One help but get the feeling that if was down to Gordon Brown, President Obama should skip the ceremonies and celebrations that follow the swearing in and get right down to help solve the global financial crisis.

The feeling that there is a shortage of good ideas about in the UK to stop the banks from sliding into nationalisation was very obvious as Brown and Darling’s latest plan to kickstart the banks seemed to get off to a very flat start.

The announcement of phase two of the bank’s recovery plan did provide some short lived optimism. However hope for a rapid financial turnaround were quickly dashed as reports of share collapse for all the leading banking groups, especially RBOS began to flow in. However UK government officials hastened to chip in by saying that the plan to boost business confidence and free money for lending by the banks was for the good of the business community and not just the banks.

PM Gordon Brown was said to be losing patience with the banks and especially upset with RBOS and their irresponsible and excessive lending. The prime minister expressed his feelings in no uncertain terms, by announcing: “I am not going to stand idly by and let people go to the wall because of irresponsible mistakes of a few bankers.” City experts said that the latest financial package could cost the taxpayer hundreds of billions of pounds.

The benchmark FTSE 100 slipped 38.59 points to 4,108.47, as the pressure to sell mounted, wiping out any trace of Friday’s 25.95- point gain. The loss means that the index has closed down in eight out of the past nine sessions.

Volume on the FTSE 100 were at record highs, with 1.87 billion shares trading hands, although the index dig succeed in slipping 38,59 points to 4,108.47. There were obvious signs of pressure to sell and Friday’s 25.95 point gain was soon eaten up on a wave of selling. When the FTSE 100 index shut up shop for the day, it was eight day out nine that it had closed on a downer.

Responsible as ever was the banking section, with the unwilling star of the show being RBOS that fell by an astounding 66.57 per cent (23.1p at 11.6p) Lloyds LSB did better, down a mere 33.94 per cent (33.4p at 65p), with Barclays fairing the best of the bunch falling only 10.2 per cent (10p at 88p)..

Elsewhere, Wolseley the construction materials group lost 9.06 per cent of their share value ( 31.25p to 313.5p) The fall was brought about by press reports that the group was trying to raise as much around 500million pounds in rescue capital.

The FTSE 250 closed at 6,215.49, down 34.11 points. Leisure and entertainment groups were key contributors to the downturn. Enterprise Inns fell 21.14 per cent (9.25p to 34.5p). Reasons given were that the bank’s tight lending policy is due to have a major effect in the group’s liquidity in the short term.

Punch Taverns, also reckoned to be chronically undercapitalized, also took a tumble, down 16.67 per cent (6.5p to 32.5p).

Private sector building group Taylor Wimpey saw their share value lose 16.88 per cent (3.25p to 16p). Losses were in the light of warnings that the 2009 credit outlook for the western European construction and homebuilding companies continued to look increasingly.

Trade was muted worldwide as markets felt the effects of the lack of trading on Wall Street due to the Martin Luther King Jr. national holiday in the U.S, although futures suggested that Wall Street would trade higher after the holiday. Dow futures rose 52 points, or 0.6 percent, to 8,295 and S&P500 futures gained 6.5 points, or 0.8 percent, to 855.10.

Sterling was mixed against other major currencies early Tuesday with rates as follows:

pound/US dollar 1.39167
Pound/Euro 1.07596 EUR
Pound/Japanese Yen 125.901

Oil prices continued to languish with light sweet crude for February delivery down 36 cents at $36.15 a barrel in electronic trading on the New York Mercantile exchange by early afternoon in Singapore.