FTSE 100 loses early gains but Barclays up 24%

The FTSE 100 fell 0.67 per cent today – but the day was dominated by gains for Barclays as it passed a financial stress test.

The index closed at 3,898.85 – a drop of 26.35 points – as falls in New York knocked early London gains.

Over the week, the FTSE 100 gained 1.45 per cent – but still fell shy of the 4,000 mark.

The big story of the day was Barclays, which rose 24.05 per cent to 173.80p.

The gains came after the lender confirmed morning rumours that it had passed a financial stress test from the Financial Services Authority (FSA).

In a statement, Barclays confirmed the FSA had applied a detailed stress test to its balance sheet and profit and loss account.

"Barclays confirms, following this work and discussion with the FSA, that its capital position and resources, after exposure to the stress, are expected to continue to meet the capital requirements which the FSA published on January 19th 2009," a statement from the bank read.

Attention in the coming days, however, will remain with Barclays as it mulls over whether to take part in the Treasury's Asset Protection Scheme by the Tuesday deadline.

Passing the FSA test does not mean the insurance scheme for toxic assets is not necessary – but without it the Treasury would have pressured Barclays to pick it up.

Barclays is already in talks for the £4.5 billion sale of its fund management arm, iShares, which could be used to cover the cost of the insurance – but passing the stress test means a rights issue to raise extra capital should not be necessary.

Elsewhere on the FTSE 100, Lloyds Banking Group was up 10.29 per cent – following Barclays.

British Land rose 7.09 per cent, miner Rio Tinto gained 4.03 per cent and Legal & General climbed 3.37 per cent.

The mixed day also saw miners and insurers among the biggest losers.

Eurasian was down 7.45 per cent and Kazakhmys dropped 4.60 per cent, while Prudential fell 5.76 per cent.

David Jones, chief market strategist at IG Index, said: "Investors seem to be rudderless at the moment.

"The 4,000 mark has proved to be a barrier for the UK index this week and the last couple of days have seen the US market strength start to wane. With little in the way of major economic announcements due out at the beginning of next week, share prices could be in for some uneventful days ahead of the next major release – Friday's US unemployment numbers."

He added: "At the moment, after plunging to near six year lows in early March, it won't be too much of a hardship for investors to have the potential of boring markets for a change."