Barclays' profits down six per cent

Barclays' profits dropped by six per cent in the last six months after it was forced to make huge provisions for bad loans in Argentina.

But the banking group still made £ 1.75 billion profits before tax in the half year to the end of June.

The banking group, which has more than 10 million customers in Britain, said it had decide that just over half its loans to Argentinian businesses and banks were now in doubt, forcing it to make provisions of £104 million.

This boosted the total bad and doubtful debt provision for the half year by 43 per cent to £713 million. Chief executive Matt Barrett said that the need to make provisions against both business and personal loans in Britain had not risen as much as he had expected.

Mr Barrett said that while the financial market environment "remains challenging" indicators were beginning to show signs of improvement in Britain.

The shock rise in the amount of money set aside for bad loans hit Barclays shares hard - falling almost five per cent - and contributed to a weak opening today on the London stock market. The FTSE 100 Index of leading shares fell 19.6 points to 4226.6 with most dealers content to sit on the sidelines ahead of the decision on interest rates from the Bank of England's Monetary Policy Committee. It is not expected to change rates from their current four per cent.

? Investors were also spooked by poor first half results from ICII. Its Dulux paint business was hit as DIY enthusiasts downed their paint brushes to watch the World Cup during June which is traditionally a good month for decorating.