Barclays profit up 17% on equities boom, but shares fall as costs set to rise

Volatility in financial markets triggered by the Iran war has driven a trading frenzy that has boosted banks' revenues, while blockbuster M&A deals and IPOs have fuelled fees.

Barclays is the first big British bank to report earnings this week, as the country's lenders warily eye Andy Burnham, the country's seventh prime minister in the last decade. Having reaped record profits in recent years, banks have been concerned the left-leaning leader might hike taxes on them.

They received a boost on Friday, however, when Reuters reported Burnham's administration is likely to preserve the previous one's pro-growth approach to financial services.

Barclays' first-half profits rose by a better than expected 17% as it reaped bumper equities trading revenues from volatile markets, although its shares dropped on Tuesday in a sign of high investor expectations for British banks.