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FTSE 100 higher though life insurers pounded as regulator launches major probe

Last updated: 23:03 28 Mar 2014 AEDT, First published: 00:03 29 Mar 2014 AEDT

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London’s blue chips index eked out a small gain despite another tough day for the insurance sector.

Just a week after the chancellor freed pensioners from the yoke of annuities, the finance regulator announced an investigation in the selling of life insurance and related policies all the way back to the seventies.

The Financial Conduct Authority will examine how long-standing customers in the life insurance market have been treated, which discouragingly for the industry sparked a stampede out of their shares.

Resolution (LON:RSL), which specialises in zombie life funds, tumbled over 14% to 273p, Aviva (LON:AV.) fell 7.5% to 447p, L&G (LON:LGEN) 7% to 198p and Prudential (LON:PRU) 4.5% to 1,256p.

Banks were also caught up in the rush of exists. Bancassurance, the combination of banks and life insurers, was a buzzword a decade so ago, but with the cost of PPI mis-selling now in the tens of billions, the possibility of yet another costly scandal hitting the sector sent Lloyds (LON:LLOY) down 2%.

FTSE100 managed to gain seven points to 6,595 largely due to miners having a better day on reports that the Chinese government will spend on infrastructure to help boost its flagging economy.

Glencore Xstrata (LON:GLEN) was up 2%, Anglo American(LON:AAL) rose by a similar amount while a mild bounce in the gold price lifted Randgold Resources (LON:RRS).

Kromek (LON:KMK) was a notable faller among the small caps, tumbling 44% to 38.4p after a warning it will make a loss this year. It joined AIM just five months ago.

Shares in Bellzone Mining (LON:BZM) shot up on Friday morning forcing management to confirm that a bid for the company could be on the cards.

Shares, which closed at 3.02p on Thursday, zoomed up to 3.5p shortly after trading opened, after the company said it is in talks with major shareholder China Sonangol International Singapore about a possible cash injection that could lead to an offer being made for the company.

DiamondCorp (LON:DCP) shares advanced 9% as it said the Lace mine’s underground development in on track and within budget, and raised £2.1mln in an oversubscribed share placing.


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