The FTSE 100 started modestly higher on Friday, boosted by a positive start from the banking sector after regulatory fears were eased.
It was reported this morning that the Basel committee's proposals – to be presented at the weekend's G20 summit meeting in Toronto – would not be as severe as initially mooted. The latest draft proposal is said to have reduced the amount of liquid funds banks would have to set aside as insurance against another financial crisis.
At 9.30am Standard Chartered – due to unveil its quarterly update on Monday – led the UK blue-chip index, up 2.78% to 1758p. Also showing in the top five on the leaderboard were HSBC, 2.04% stronger at 650.10p, and Royal Bank of Scotland Group, up 1.59% to 45.91p.
It was not all rosy for banks this morning though, as Lloyds Banking Group slipped into the red, down by 2.11% at 55.12p. Lloyds was kept off the bottom rung of losers though, by the perennially troubled BP, with the oil giant once again struggling. At 9.45am BP had sunk 5.17% to 308.45p.
Ahead of the G20 meeting which will focus on how best to climb out of the financial meltdown, US Treasury Secretary Timothy Geithner said that global heads needed to focus on expanding growth and confidence alongside the necessity of reducing national debt levels.
Meanwhile, the Bank of England's latest financial stability report has stated UK banks' exposure to European lenders is a 'key risk' and that banks should ensure they have sufficient cash reserves. Though the report said the EU has taken positive measure to limit the fallout, the risk of defaulting remains – and as if to reinforce the point, fears over Greece's fiscal problems increased last night.
Indeed fresh concerns over Greece defaulting contributed to last night's fall in the Dow Jones, which slid by 145.64 points (-1.41%) to 10152.80, leaving only two stocks positive on the day. Looking ahead, US stock index futures declined, with both the Dow Jones and S&P 500 futures down 0.2%, indicating a lower open to US markets this afternoon.
By 10.30am, the FTSE 100 had fallen 25.81 points (-0.51%) to 5074.42, while the mid-cap FTSE 250 was 44.06 points (-0.45%) weaker to 9654.24.
