Shares retreat over plan for euro zone debts and plunge in Goldman profits

FTSE:5,976.70 (–79.73) Mid-250:11,728.16 (–102.16) Small Cap:3,291.94 (–10.55)

SPECULATION OVER plans to tackle euro zone debt and disappointing earnings from US investment bank Goldman Sachs led to losses on the London market yesterday.

The FTSE 100 index closed 79.73 points lower at 5,976.70 after Goldman reported a 53 per cent plunge in fourth-quarter profits due to sharp declines in its investment banking businesses.

Confidence in the banking sector was shaken further by reports out of Germany that Greece’s debt may have to be restructured.

The German government was reported to be considering a plan that would allow the Greek government to retire some of its debt early using subsidised credits from the EU bailout fund.

Barclays, which has also been troubled by a fine and compensation order totalling £67 million yesterday from the Financial Services Authority, dropped more than 3 per cent or 11.6p at 296.1p.

Sentiment was weak across the FTSE financials as HSBClost 5.2p at 704.1p, Lloydsdropped 1.6p to 66.2p, and investment bank Investec eased 12.5p at 513p.

Financial Timespublisher Pearsonheaded gains on London's FTSE 100 after it raised guidance for a key earnings target in an upbeat trading statement. The group's shares rose 45p to 1051p, or 4 per cent.

However the focus was largely outside the top flight after the latest flurry of updates.

While bookmakers William Hilland Ladbrokesraced 7 per cent and 2 per cent higher, Comet parent Kesaplummeted and embattled music and book group HMVsuffered hefty falls as Christmas trading woes took their toll.

William Hill shares rose 12.3p to 189p as it said the weather that decimated sporting fixtures in the run-up to Christmas may not have been as damaging to its business as many feared.

Rival Ladbrokes benefited from the cheer, up 3.2p to 135.3p.

Pub chain JD Wetherspoonfollowed the firms with a 23p gain to 464.7p after sales growth almost doubled to 3 per cent in the 12 weeks to January 16th.

Trading conditions were less favourable in the consumer goods sector before Christmas. With Kesa bracing the City for results at the bottom end of expectations, shares slumped 14.8p to 136p.

HMV, which also owns Waterstone's book stores, fell 3 per cent or 0.8p to 25.5p. – (PA).