* FTSE 100 flat near 8-month high
* Deutsche Bank loss a bad omen for UK bank results
* Weir rises as data, Redburn point to sector pick-up
By Francesco Canepa
LONDON, Jan 20 Britain's top equity index was
flat on Monday, held back by falls in banking shares as a
surprise loss by Germany's Deutsche Bank was seen as a bad omen
for UK lenders' results.
Royal Bank of Scotland and Barclays shed
2.2 percent and 1.3 percent, respectively, by 1148 GMT, the top
fallers on the FTSE 100, after Deutsche Bank
announced a pre-tax loss for the fourth quarter.
The German bank blamed the loss on a fall in revenue at its
debt-trading divisions as well as costs for litigation and
Barclays and RBS, both due to report fourth-quarter earnings
next month, derive around 20 percent and 15 percent respectively
of total group income from trading in fixed income, currencies
and commodities (FICC), according to Shore Capital estimates.
Shares in the two UK banks had risen 6.1 percent and 7.6
percent respectively since the start of the year before Monday's
falls, boosted by healthier prospects for the British economy.
"It would be sensible to expect weak performances from the
likes of Barclays and Royal Bank of Scotland in Q4," Gary
Greenwood, an analyst at Shore Capital, said. "The risk (for the
stocks) is to the downside given the rise that we've had."
Analysts at Goldman Sachs also warned that so called
non-recurring items such as fines, provisions and charges, have
become a persistent feature of UK banks' results and raise
question marks over lenders' return on equity targets.
Commercial banks knocked a combined 6 points off the FTSE
100, which was up 2.63 points after ending at an
eight-month high on Friday. The index has risen 1.2 percent so
far this year.
"We maintain that the markets will continue to push higher
through January," Atif Latif, director of trading at Guardian
"Equities still remain in an uptrend and we have continued
to maintain our bullish bias."
Helping buoy the FTSE on Monday was oil & gas engineering
firm Weir, which rose 3.7 percent in heavy volume after
data showed an increase in the number of U.S. natural gas and
horizontal rigs last week and Redburn Partners initiated
coverage of the stock with "buy", citing improving activity in
Volume on Weir's shares was 67 percent of its full-day
average for the past three months, compared with FTSE volume of
just over a quarter of the index's own average. Trading on the
index was expected to be quiet with U.S. stock markets shut for
Gold miners Fresnillo and Randgold were the
top FTSE risers as gold hit a six-week high and data showed
hedge funds and money managers raised their bullish bets on the
metal for a third consecutive week.