How Politeness Softens a Blow and UK Banking Update

Yesterday, to instill confidence in the bank, Barclays issued a personal letter to shareholders outlining their current balance sheet status and recent efforts to improve earnings. The Financial Times commented on the old-school British politeness of the gesture, and conjectured that it worked - honesty, "up-frontness," and outlining the plan of action engender trust and lay out the path ahead which is reassuring to people. What an idea? In other UK banking news, this update from the WSJ today:

LONDON MARKETS
U.K. banks catch fire to help lift London stocks
By Steve Goldstein, MarketWatch
Last update: 4:47 a.m. EST Jan. 28, 2009
Comments: 11
LONDON (MarketWatch) -- The hard-hit banking sector caught fire in London trade on Wednesday, with some traders returning to lenders on the belief the U.K. government won't fully nationalize them.
Lloyds Banking Group (UK:LLOY: news , chart , profile ) (LYG:
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Last: 3.82+0.42+12.35%
4:07pm 01/27/2009
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LYG 3.82, +0.42, +12.4%) , already 43% held by the U.K. taxpayer, was the biggest beneficiary, surging 31%.
Barclays (UK:BARC: news , chart , profile ) (BCS:
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Last: 5.21+0.11+2.16%
4:00pm 01/27/2009
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BCS 5.21, +0.11, +2.2%) added 8%. The Royal Bank of Scotland (UK:RBS: news , chart , profile ) (RBS:
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Last: 4.42+0.38+9.41%
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RBS 4.42, +0.38, +9.4%) , which is 70% in the hands of the U.K. government, added 1 pence to 17 pence.
"I think what we are seeing is a retreat of the nationalization fears which gripped markets last week, people are buying into what they see as opportunity," said Patrick Gordon, a market strategist at the U.K. brokerage Killik & Co.
"I don't think the government wants to nationalize banks if they can help it," he said.
Also rebounding was British Land (UK:BLND: news , chart , profile ) , up 7.4% as The Times (of London) reported that it and Land Securities (UK:LAND: news , chart , profile ) are going to sell 750 million pounds of assets to help deal with financing issues.
More broadly, the U.K. FTSE 100 (UK:UKX: news , chart , profile ) rose 1.3%, or 52.9 points, to 4,247.30. Gainers outnumbered fallers by a 2-to-1 margin.
European stocks also were strong, as were U.S. stock futures. See Europe Markets.
Of other movers, BSkyB (UK:BSY: news , chart , profile ) shares rose 7% as the satellite broadcaster swung to a quarterly profit of 166 million pounds on 6% revenue growth and added 171,000 net subscribers. Analysts attributed the rise to consumers buying the firm's Sky+ recording and SkyHD high-definition services.
"We see growth in these premium products as a significant positive for Sky, as this should increase average revenue per user and lower churn over time, all other things being equal," said analysts from Numis Securities.
BSkyB is 39% held by News Corp., which owns MarketWatch, the publisher of this report.
It wasn't all rosy, however.
Rio Tinto (UK:RIO: news , chart , profile ) dropped 4.6% as the miner admitted it may sell shares to help cut its debt by $10 billion.
Other miners also struggled. Xstrata shares (UK:XTA: news , chart , profile ) dropped 9.8%, and Vedanta Resources (UK:VED: news , chart , profile ) fell after a 99% drop in earnings before interest, tax, depreciation and amortization. The earnings tumble came on inventory write-downs and falling prices, Vedanta said.
Private-equity group 3i (UK:III: news , chart , profile ) slumped 3.4% as the group estimated a 21% drop in the value of its top 50 investments, before foreign exchange gains, during the Dec.-ending quarter. It also comes amid reports that creditors want to take over one of its holdings, VNU Business Media Europe, in a debt-for-equity swap.
3i said it's willing to put more equity into VNU.
Tate & Lyle (UK:TATE: news , chart , profile ) slipped 5.5% as results for the year to March 31 will be at the lower end of market expectations, which the company blamed on its U.S. ingredients arm and to a lesser extent on ethanol demand.
Outside the FTSE 100, HSBC Infrastructure (UK:HICL: news , chart , profile ) slipped 3% as the U.K. infrastructure investment group warned its net asset value will likely fall when next calculated on March 31. End of Story
Steve Goldstein is MarketWatch's London bureau chief.