FTSE falls 1% despite strong results for financials

The FTSE fell in early trading in reaction to losses on Wall Street overnight and a weak opening in European markets.

London's leading index was down 51.38 points, or 0.95%, to 5,345.10 just before 9am, despite strong results from the financials sector.

Shares were also down across Europe. The German Dax lost 0.45% to 6279.69 and the French Cac 40 dropped 0.41% to 3732.24.

However financials were seen as the early risers on the FTSE after posting positive H1 results.

Lloyds shares jumped 2.75% to 73.9p on news the banking group had returned to profit for the first time since the financial crisis which led to its part nationalisation.

Legal & General was also an early performer following strong first half results. Its shares were up 1.71% to 92.35p, after reporting a rise in profits and dividends.

Standard Chartered suffered heavy losses in early trading, dropping 4.55% to £18.16 per share before 9am, despite posting pre-tax profits improved 10% year on year in the first half of 2010.

Pre-tax profits of $3.12bn were up from $2.84bn in the same period of 2009. But the comparison with the second half of last year was much more impressive, with profits showing a 35% improvement from the $2.31bn in the last six months of 2009.

US stocks ended behind on Tuesday after new figures showed contracts for pending home resales fell to a record low in June. At close, the Dow Jones index of blue-chip stocks was down by 38 points, or 0.36%, at 10,636.

Japanese shares closed higher despite weakness in Chinese stocks capping gains on the Nikkei 225. It rose 123.7 points, or 1.3%, to 9,694.