European shares lifted by solid earnings but RBS slumps

European shares lifted by solid earnings but RBS slumps

European shares rose on Friday, helped by solid earnings from companies including cement making group LafargeHolcim, but Royal Bank of Scotland slumped after weak results.

The pan-European STOXX 600 index was up 0.5 percent, extending gains after better-than-expected U.S. jobs data, although the index remained on track for its first week of declines in four.

LafargeHolcim rose 5 percent as it reaffirmed its guidance and beat quarterly profit forecasts.

"LafargeHolcim results were, for once, a positive surprise, supported by the recent recovery in the important markets of India and Mexico as well as some European countries," Baader Helvea analysts said.

Hugo Boss jumped 6.7 percent after the German fashion house beat forecasts for quarterly operating profit and new CEO Mark Langer said he would close about 20 more stores as a cost-cutting drive appears to be bearing fruit.

Europe's STOXX 600 bank sector index rose 1 percent, clawing back ground following a slump at the start of the week after industry stress tests fueled new concerns over banks' capital levels at a time when the industry is struggling to grow with ultra-low interest rates.

Mediobanca rose 7.5 percent after the Italian investment bank proposed a higher dividend and posted net profits that beat expectations.

However, Royal Bank of Scotland fell 6.5 percent as it reported widening first-half losses and scrapped plans to turn its Williams & Glyn unit into a standalone bank, as Britain faces a period of economic instability caused by its vote to leave the European Union.

"The outlook statement is notably cautious, reflecting increased uncertainty following the outcome of the EU referendum and lower for longer interest rate environment," Shore Capital analyst Gary Greenwood said.

"Despite the stock trading at a significant discount to book value, it is hard for us to retain a positive stance," he said, placing his buy recommendation under review.

Monte dei Paschi, which fared the worst in the stress tests, continued to face concerns over a rescue plan for the company, with its shares touching a record low.

Novo Nordisk also slumped 9 percent after the Danish drug maker cut its forecast for full-year profit growth and warned of pressure on prices from tough competition in the United States next year. (Additional reporting by Sudip Kar-Gupta in London; Editing by Louise Ireland)

Most common causes of debt
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Most common causes of debt

There are some very common reasons for building up problem debts. Here we reveal seven of the most common, and what you can do if you face them.

Unemployment or illness that means one or more of the household’s earners are unable to work will bring a profound change in family finances, and according to the Money Advice Service is the most common reason for getting into problem debt.

If your circumstances change, therefore, you need to immediately address your family finances, and put everything on a minimum spend lockdown. You should also look into the benefits and tax credits that are available sooner rather than later, to try to close the gap.

If you are on the kind of contract that means varying hours, it can be incredibly difficult to work out what you can afford to spend - making it the second most common reason for getting into debt - according to the Debt Support Trust.

Rather than swinging through the extremes from week to week, the best approach is to establish a budget that will work in the leanest of months, so you don't find yourself getting used to the months when you work more hours.

According to Citizens Advice, trying to service too much debt is the third most common reason for getting into difficulties. The TUC found that those with problem debts spend 40% of their income on debt repayments.

If you are in this position, you officially need some help with your debt problems. If you continue to rob Peter to pay Paul, you will end up owing more and more, so you need to take stock and talk to a debt charity about all your options.

The double-whammy of the legal bills combined with the incredible cost of establishing two separate households is enough to make divorce or separation the fourth most common reason for going into debt - according to the Debt Support Trust.

There's no easy solution, but if you are going through this, it can be helpful to talk through your financial situation with someone you trust or a debt charity, who can help you balance a stretched budget.

Problem debts aren’t necessarily caused by a sudden shock to the system. According to the Money Advice Service, 20% of their clients are simply trying to live on an unsustainably low income.

If you are in this category, it’s important to seek help on the benefits and tax credits you may be able to receive. It’s not always easy to navigate the system, but charities like StepChange have experts on the benefits system who can talk you through what’s available.

The combination of rising costs and stagnating wages over the last few years has meant increasingly people saw their monthly wage cover less and less of their monthly outgoings. This position has started to ease more recently, but has left many people far worse off than before the financial crisis. The Money Advice Trust said a combination of this and unexpected costs was responsible for almost one in ten problem debts.

If you consistently spend more than you are expecting, it's well worth keeping a spending diary. That way you can establish the real cost of living, and start to identify where you can cut costs.

The Money Advice Service says it commonly deals with individuals who have struggled to get to grips with budgeting and debts, and have got into debt because they don’t have the skills and knowledge to manage their money effectively.


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