FTSE down at close

The London market searched for direction today as financial firms were out of favour amid reports of a windfall tax on banks.

Investors were in a cautious mood ahead of Wednesday’s Pre-Budget Report, while US dollar gains also hurt metals prices putting some heavyweight miners under pressure.

The FTSE 100 Index ended 11.7 points lower at 5310.7 despite a more optimistic opening on Wall Street.

The Dow Jones Industrial Average was up 0.3% in early trade as markets await guidance on the outlook for the world’s largest economy when US Federal Reserve chairman Ben Bernanke gives a speech later.

The dollar is also enjoying a current surge after far better than expected US jobless figures on Friday – raising the prospect of possible interest rate hikes next year.

Banking shares led the falls in London amid growing speculation of a British government windfall tax on the sector.

Part-nationalised Royal Bank of Scotland was the biggest top-flight faller as the Treasury also outlined details of its scheme to insure toxic assets. Shares fell almost 5% or 1.63p to 33p, followed by Lloyds Banking Group, which was down 2.31p to 53.69p.

Meanwhile Barclays was 6.45p down at 297.05p and HSBC lost 10.8p to 712.8p as the sector nervously awaited the autumn Budget report.

Miners were prominent on the fallers’ board after the dollar’s revival, including Eurasian Natural Resources, down 19.5p to 901.5p.

Randgold Resources, however, ended the day up 25p at 4998p despite earlier falls as the price of gold slid steeply from record high levels.

Other top-flight losers included engineering and project management firm Amec, which shed 12.5p to 797.5p despite RBS analysts upgrading their target price on the stock.

Dairy Milk maker Cadbury was meanwhile down 5p at 790p, or nearly 1% off, after announcing it would launch its defence against Kraft’s hostile takeover bid on December 14.

Heading in the opposite direction was accountancy software firm Sage, which continued its progress in the wake of well-received results last week, adding 1.8p to 232.6p.

Holiday giants Thomas Cook and TUI Travel were among the biggest risers, adding 4.2p to 221.2p and 3.7p to 250.5p respectively after their own better than expected figures.

Waste management firm Shanks set the pace in the FTSE 250 – soaring more than 40% after it suggested it was open to a takeover.

It has rejected an approach worth 135p a share, or £536m (€594m), from a private equity group – thought to be US firm Carlyle – but added a bid worth 150p a share could represent a successful price. Shares were 38.4p higher at 128.5p.

The biggest Footsie risers were Antofagasta up 20p at 920.5p, Thomas Cook up 4.2p at 221.2p, Bunzl up 11.5p at 651.5p and BAE Systems up 5.1p at 341.1p.

The biggest Footsie fallers were Royal Bank of Scotland down 1.63p at 33p, Lloyds Banking Group down 2.31p at 53.69p, British Airways off 4.6p at 207.4p and Barclays down 6.45p at 297.05p.

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