By This Is Money Reporters

PUBLISHED: 03:37 EST, 27 February 2014 | UPDATED: 12:29 EST, 27 February 2014

17.30 (CLOSE): More than 1.5billion was wiped from the value of Royal Bank of Scotland today after the troubled group posted bigger-than-expected losses.

The latest deficit of 8.2billion came amid warnings in the City that many of RBS’s targets for a return to health were a long way from being achieved.

Shares were 8 per cent lower but the FTSE 100 Index recovered from a weak start to close 11.1 points higher at 6810.3. The pound held firm against the US dollar and euro at 1.67 and 1.22 respectively.

Big loss: RBS shares dropped after the tax payer owned bank announced annual losses of 8.2billion

Part-nationalised RBS led the fallers board by some distance as its shares dived 27.4p to 326.6p, despite Mr McEwan’s plans to slash the number of divisions to three and make savings under another swingeing cost-cutting drive.

IG client manager Will Hedden said: ‘It is still hard to see the light at the end of the tunnel of nationalisation as a sixth straight annual loss misses expectations and highlights the job that still remains.

‘One has to feel that the continued political fever created by bonus-paying at the investment bank has kept many investors away.’

RSA Insurance was also sharply lower after former RBS boss Stephen Hester axed the company’s dividend and launched plans to raise 775million through a rights issue equivalent to 20 per cent of its market value.

With operating profits for 2013 down to 286million from 601million a year earlier, shares slumped 4.1p to 98.1p, a fall of 4 per cent.

Other insurers were also under pressure as the sector counts the cost of a rising bill for flood claims and difficult conditions in the motor insurance market.

Aviva was 3.9p lower at 469.1p, while Admiral was 15p cheaper at 1433p.

Pensions and savings firm Standard Life was also under pressure – down 3.4p to 381.8p – after it announced a 13 per cent fall in profits to 751million, despite a 12 per cent rise in assets under administration to 244.2billion.

And advertising and marketing giant WPP fell 46p to 1285p after it trimmed earnings guidance and cautioned that competitive pressures were becoming ‘more and more intense’.

On a brighter note, shares in leisure group Whitbread rose after the Costa coffee and Premier Inn hotel chain operator said it expected to post full-year results towards the top end of expectations.

Shares rose 206p to 4397p as it said like-for-like sales rose 6.8 per cent in the 11 weeks to February 13.

Outsourcing group Capita led the risers board as it said pre-tax profits rose 14 per cent to 475million in 2013 and revealed 3.3billion in contract wins, with a 5.5billion bid pipeline. Shares were 73p higher at 1158p.

The biggest FTSE 100 risers were Capita up 73p at 1158p, Whitbread ahead 206p at 4397p, Rolls-Royce up 31p at 992.5p and easyJet ahead 41p at 1721p.

The biggest fallers were Royal Bank of Scotland down 27.4p at 326.6p, RSA Insurance off 4.1p at 98.1p, WPP down 46p at 1285p and Smiths off 24p at 1346p.

14.55: London shares cut their losses in mid-afternoon trade as US stocks posted an early rally, with some upbeat US economic data helping to alleviate the fears caused by a dangerous political situation in Ukraine.

With an hour and a half of trading to go, the FTSE 100 index was down 19.1 points at 6,780.0, well off the session low of 6,733.5 but still continuing the retreat seen since the index hit a 14 year closing high on Monday.

But in early deals in New York, the Dow Jones Industrial Average managed to recover from an opening fall to add 4.2 points at 16,202.6, supported by positive US durable goods numbers.

More testimony: New Fed boss Janet Yellen will address the Senate Banking Committee in a semi-annual testimony about monetary policy later today.

US core durable goods orders unexpectedly rose last month to 1.1 per cent against expectations for a 0.1 per cent fall, reflecting a surge in orders for computers and electronic products, fabricated metal products and defence capital goods.

But US weekly jobless figures showed more Americans than forecast filed applications for unemployment benefits last week, with claims increased by 348,000 with many having only expected an increase of 334,000.

Federal Reserve Chair Janet Yellen will address the Senate Banking Committee in a semi-annual testimony about monetary policy later today.

Her appearance, which was meant to take place on February 13, should hopefully give investors some insight into how an unexpectedly harsh winter has impacted US economic activity.

Investors stayed cautious, however, on concerns over a build-up of Russian forces on the Ukrainian border as the turmoil in the former Soviet republic continues following the ousting of its pro-Russia president earlier this week.

Markus Huber, senior sales trader/senior analyst at Peregrine & Black said: ‘The entire situation is very delicate at the moment not only what politics and a possible invasion by Russia is concerned but also concerning the exposure of some European banks and businesses to the Ukraine.

‘While fundamentally not much has changed increasing uncertainty could hurt markets in the short-term, with traders possibly reducing their exposure to stocks for now.‘

In London, part-nationalised RBS led the FTSE 100 fallers board by some distance as its shares dived 30.25p to 323.75p, despite new boss Ross McEwan’s plans to slash the number of divisions to three and make savings under another swingeing cost-cutting drive in the wake of bigger-expected full-year losses of 8.2billion.

‘RBS’s numbers today highlight a troubled bank which has failed to turn profitable and in its attempts to do so, has lost the markets’ trust. This all means that privatisation of RBS still appears to be far out of sight said Ishaq Siddiqi, market strategist at ETX Capital.

But on the upside, shares in mining  mid cap Kazakhmys jumped 48.1p to 271.5p despite reporting losses of $ 681m for 2013, after announcing a proposal to spin off a large chunk of its mining portfolio to Kazakhmys shareholder and former chairman Vladimir Kim.

The miner will retain its best prospects at Bozshakol, Aktogay and Koskay and expects to produce around 285,000-295,000 tonnes of copper a year, compared to 294 000 last year.

Toby Morris, senior sales trader at CMC Markets said: ‘The move would essentially allow the firm to hand pick its best performing assets without having to raise cash or restructure its debt.  Shareholders clearly like the proposal, with the stock surging.’

13.15: Fears over escalating tensions in the Ukrainian region of Crimea drove the Footsie lower at lunchtime, led lower by a sharp post-results sell-off in taxpayer owned Royal Bank of Scotland.

The FTSE 100 was 35.3 points lower at 6,763.8, on track for its biggest daily drop in a month, as the top flight continued its retreat after coming close to a record high earlier in the week.

Unnerving investors today was a report from Interfax news agency that Russian aircraft had been put on high-alert on the Ukrainian border as the turmoil in the former Soviet republic continues following the ousting of its pro-Russia president earlier this week.

Red menace: Investors were spooked today by fears Russan forces could intervene in the turmoil in Ukraine

Will Hedden, sales trader at IG said: ‘The involvement of Russia would be the bigger worry, that it’s going to lead to frosty ties with the EU and for the US with Russia.’

On the domestic front, Royal Bank of Scotland led the blue chip fallers, dropping over 8 per cent after its new chief executive Ross McEwan outlined plans for a large-scale overhaul after the mostly state-owned lender reported an 8.2billion loss.

IG’s Hedden said: ‘It is still hard to see the light at the end of the tunnel of nationalisation as a sixth straight annual loss misses expectations and highlights the job that still remains.

‘One has to feel that the continued political fever created by bonus-paying at the investment bank has kept many investors away.’

RBS shares lost 28.8p at 325.5p. Peers Barclays and Lloyds Bank were also both lower with the financial sector the day’s biggest weight on the blue chip index.

Among other financials, RSA Insurance was also sharply lower after former RBS boss Stephen Hester axed the company’s dividend and launched plans to raise 775million through a rights issue equivalent to 20 per cent of its market value.

With operating profits for 2013 down to 286million from 601million a year earlier, RSA shares shed 2.6p to 99.5p, a fall of 3 per cent.

Other insurers were also under pressure as the sector counts the cost of a rising bill for flood claims and difficult conditions in the motor insurance market. Aviva was 12.25p lower at 460.75p, while Admiral was down 27p at 1421p.

On a brighter note, outsourcing firm Capita led the blue chip gainers, up 55.0p to 1,145.0p after it posted a 14 per cent jump annual profits and said it was confident on 2014 after winning 588million worth of new contracts so far this year.

Dafydd Davies, senior trader at Prime Wealth Group said: ‘To some, the subject of outsourcing may be as interesting as watching paint dry, but as Capita has shown time and time again, if it is well managed it can be an exceptionally lucrative business.

‘It is also important to remember that not only has Capita avoided the scandals that have dogged rivals, but the prestigious government criminal tagging contracts that were so mismanaged by G4S and Serco have been handed to the group on a plate.

‘Prime Wealth believes that today’s numbers and the strong start to 2014 should propel Capita shares to new year highs and beyond in the coming 2-4 weeks,’ he concluded.

Further down the food chain, Domino’s Pizza shares gained 2.0p at 558.5 as it boasted of being one of the biggest growth stories on the high street as it racked up more sales records from its UK stores.

The delivery chain took an all-time high of 14.1million during one week in December, with established stores averaging weekly sales of 20,903. Like-for-like sales rose 7 per cent last year, helping profits to rise 11 per cent to 50.4million.

09.45: The Footsie extended its falls as morning trade progressed with geopolitical concerns over Ukraine muddied together with a massive batch of blue chip company news for investors to try and digest today.

In the forefront, the troubles of high profile financial groups Royal Bank of Scotland and RSA Insurance were laid bare in results updates that sent investors running for cover.

In early morning trade, the FTSE 100 Index was down 28.3 points at 6.770.9, falling further back from Monday’s 14 year closing peak, with thoughts of an assault on the index’s all-time high at 6,930 now a distant memory.

Big loss: RBS shares dropped after the tax payer owned bank announced annual losses of 8.2billion

RBS shares fell 6 per cent or 21p to 333p after a worse-than-expected update in which chief executive Ross McEwan announced annual losses of 8.2billion.

Analysts fear the latest figures mean it will take longer to return the business to an even keel, despite Mr McEwan’s plans to slash the number of divisions to three and make savings under another swingeing cost-cutting drive.

Referring to RB shares, Marc Kimsey, Senior Trader at Accendo Markets said: ‘The selling pressure here this morning is immense, investors cannot get rid of their shares quick enough and traders are substantially adding to short positions.

‘The latest update is a shocker – With the financial crisis so far behind us it is concerning to see company still in so much trouble. If you can give me a reason to buy, I’m all ears.’

RSA Insurance was also sharply lower after former RBS boss Stephen Hester axed the company’s dividend and launched plans to raise 775million through a rights issue equivalent to 20 per cent of its market value.

With operating profits for 2013 down to 286million from 601million a year earlier, RSA shares slumped 3.6p to 98.5p.

Assurer Standard Life came under pressure too – down 9p to 376.1p – after it announced a 13 per cent fall in profits to 751million, despite a 12 per cent rise in assets under administration to 244.2billion.

Advertising giant WPP Group was the biggest blue chip casualty, down 86.0p to 1,257.0p as the firm increased its share buyback programme to counter a hit from volatile emerging market exchange rates, after reporting strong 2013 trading and a good start to 2014.

Analysts at Numis said that, while the company is trading well, the shares could come under pressure from the hit to reported margins and slightly lower margin guidance.

But performing well among the welter of blue chip updates today were hotels to coffee shops group Whitbread and tobacco giant BAT.

Whitbread jumped 197.0p higher to 4,388p after it said its full year results would reach the top end of market forecasts as growing demand across its Premier Inn hotels, Costa Coffee and restaurant businesses helped sales rise in the group’s Christmas quarter.

BAT gained 41.0p at 3,215.0p as the world’s No. 2 cigarette maker said 2013 core earnings rose 6 per cent helped by growth in market share which was offset by currency headwinds and declining cigarette sales.

Anglo Dutch publishing Reed Elsevier also found support following results today, adding 7.0p at 916.0p after it reported a 7 per cent rise in earnings, broadly in line with forecasts, and said it was confident it would deliver further growth in 2014.

Hedge fund operator Man Group was the top FTSE 100 gainers, leaping 9 per cent higher with a 7.6p rise to 91.8p as it announced a share buyback and bumped up its dividend after attracting more new investment in the final quarter of 2013.

08.30: The FTSE 100 has opened down 11.1 points at 6,788.1 as escalating political tensions over the future of Ukraine rattle investors.

Russian president Vladimir Putin yesterday ordered drills by his armed forces to test combat readiness in western Russia near the border with Ukraine, prompting the US to warn that a military intervention would be a ‘grave mistake’.

News reports say that armed men have seized the regional government headquarters and parliament on Ukraine’s Crimea peninsula.

Ukraine crisis: Overthrow of previous government has provoked anger in Russia

Ukraine is heavily indebted and likely to require a bailout to avoid default following the the overthrow of president Viktor Yanukovych.

Meanwhile, traders are also wary ahead of a speech by new US Federal Reserve boss Janet Yellen to the Senate later today.

Jonathan Sudaria of Capital Spreads said: ‘Sentiment remains firmly cautious. Yellen’s testimony this afternoon may be partly to blame but she is not expected to rock the boat.

‘Maybe of more concern are the 150,000 Russian troops lacing up their boots near the Crimea. With unconfirmed reports that armed men are already seizing buildings in the area, expect the markets to start discounting all manner of geopolitical catastrophes.’

Michael Hewson of CMC Markets noted that investors were seeking the haven of US government debt on news that Russian troops were doing training exercises near the Ukraine border.

‘This nervousness is likely to translate into a softer European open this morning, ahead of German unemployment data and a keynote speech by new Federal chief Janet Yellen later this afternoon to the US Senate,’ he said.

‘The continued deterioration in US economic data over the past couple of weeks, yesterday’s surprise rise in new home sales data notwithstanding, has focused attention today on what new Fed chair Janet Yellen might say this afternoon in her testimony to the Senate.

But he added: ‘If investors are hoping that the new Fed chief might show her hand with respect to the deterioration of the data and the weather-related effects of it they are likely to be disappointed. The approach is likely to be pretty similar to her performance just over two weeks ago, insisting on measured steps and a data dependent approach to monetary policy.’

The FTSE 100 closed down 31.3 points at 6,799.15 yesterday, hit by a fall in Tesco after a spate of analyst downgrades following its results on Tuesday.

Stocks to watch today include:

RBS: Part-nationalised Royal Bank of Scotland said it would refocus on serving British customers after reporting an 8.2billion loss for 2013, hit by restructuring costs and misconduct charges.

Royal Bank of Scotland also said it intends to sell almost all of its remaining stake in Direct Line Insurance Group through a placement to institutional investors.

BRITISH AMERICAN TOBACCO: The world’s number two cigarette maker said 2013 earnings rose 6 per cent, helped by growth in market share which was offset by currency headwinds in three of its four regions.

RSA GROUP: The troubled insurer will tap its shareholders for 775million of cash in a rights issue aimed at plugging a capital hole alongside asset sales.

WPP: The world’s largest advertising company increased its share buyback programme after reporting strong 2013 results, record profit margins and a good start to 2014.

REED ELSEVIER: Media group Reed Elsevier reported a 7 per cent rise in adjusted earnings per share, broadly in line with forecasts, and said it was confident it would deliver further growth in 2014.

CAPITA: The outsourcing group posted a 14 per cent rise in annual profits and said it was confident on 2014 after winning 588million worth of new contracts so far this year.

ROLLS ROYCE: The engineering company has outlined plans designed to maintain long-term dominance in large aircraft engines, showcasing two new models that could improve efficiency by up to 10 per cent.

BP: A US federal judge denied BPs request to halt payments from the $ 2.3billion fund it created to compensate commercial fishermen for financial losses after the British company’s 2010 offshore oil spill, according to court records.

MAN GROUP – Man Group said funds under management fell 5 per cent in 2013 and market conditions were challenging, although the pace of outflows had slowed.

BARRATT DEVELOPMENTS: The residential property developer reported a 162.3 per cent increase in pre-tax profit in the first half, saying it expected to deliver full year profit towards the top end of expectations.