Cost-cutting Lloyds leads FTSE higher as Greek fears fade

Announcements from cost-cutting Lloyds bank (LLOY.L) and BG Group (BG.L) cheered UK investors this morning ahead of a further vote in the Greek parliament to underpin yesterday's approval of austerity measures which buoyed markets across the world. 

Lloyds Bank shares leapt 6% or 2.6p to 47.2p after saying it aimed to cut 15,000 jobs over the next three years. The details were revealed this morning as part of the bank's strategic review.

Other banks followed, with Royal Bank of Scotland (RBS.L) gaining 2.25% or 0.83p to 37.5p.

BG Group (BG.L) shares soared 5.9% or 80p to £14.30 after the gas producer doubled its best estimate for oil and gas reserves in Brazil’s Santos basin.

London Stock Exchange (LSE.L) shares rose 3.77% or 36p to 992p after the exchange withdrew plans for a merger with TMX group after shareholders in the Canadian exchange failed to support the plan.

FTSE losers were led by chip maker ARM (ARM.L) which fell 1.7% or 10p to 584.6.

Overall, the blue chip index was 0.55% higher at 5,888.

Investors were also contending with a mixed bag of economic news. Data showed UK consumer confidence fell in June. Nick Moon, managing director of GfK NOP which carried out the survey, said that a fall had been expected after the Royal Wedding, but added: ‘What will disappoint the government is that the drop is so large – wiping out half of last month's gain and leaving consumer confidence lower than it was at any point in 2010.’  

Meanwhile Nationwide’s house price index published this morning showed prices were flat.  Robert Gardner, Nationwide’s chief economist, said: ‘Stability remained the theme in June, with house prices flat over the month. This left house prices 1.1% below the level prevailing in June 2010’.

But macro economic factors are still likely to overshadow investor behaviour today. Greek politicians are due for a second round of voting to give legal weight to yesterday’s austerity package which was passed by 155 votes to 138. But the attention of investors may move elsewhere as the day progresses.

Marc Ostwald at Monument Securities said: ‘Today’s vote on the line-by-line legislation to implement the austerity is far more important than yesterday's’, but he doubted investors would show the same degree of focus as yesterday.

‘While the second round of Greek voting enabling the legislation for the austerity package… will clearly hold markets in its thrall again, speeches from the mercurial (James)Bullard and uberhawk (Thomas)Hoenig as well as the Q&A session on the US economy with Geithner and Bill Clinton could be of more interest.’ Bullard and Hoenig, both Federal Reserve bank presidents, are due to make speeches today.