FTSE makes fractional gains

The London market closed a fraction above its opening level today as gains from oil and insurance shares were offset by slides from Lloyds TSB and Invensys.

By the close of trading, the FTSE 100 Index was up 1.1 points at 3611.9, after losing nearly all its earlier gains – at one point the market was 72.8 points ahead.

Disappointing corporate statements in London weighed on trading while dealers were also diverted by chief UN weapons inspector Dr Hans Blix’s speech in the US.

Dr Blix told the UN security council that Iraq still had banned missiles and had not accounted for stocks of anthrax and VX nerve agent it was known to possess.

Stocks on both sides of the Atlantic rallied shortly after the speech as hopes a quick resolution to the uncertainty over war would be reached.

But shares quickly fell back and by the time London closed the Dow Jones Industrial Average was in negative territory. US exchanges were also winding down for a three day break in America due to Presidents’ Day on Monday.

Hilary Cook, director of investment strategy at Barclays Private Clients, said: “The fact is the stock market wants an end to the uncertainty, which is damaging to the economy.”

In London, oil and insurance stocks were helping keep the Footsie ahead.

Oil shares benefited from crude oil hitting a 28-month high overnight - although the price dipped slightly today. BP closed up 7p at 388p while Shell was up 6p at 350.5p.

In addition, the under-pressure insurance sector showed some signs of recovery, with Prudential up 22.75p at 415p, Aviva up 14.75p at 434p, Legal & General up 1.75p at 74.25p and Royal & Sun Alliance 3.25p stronger at 93p.

But banking group Lloyds TSB reversed an early gain to tumble 7%, off 31.25p at 400p.

Investors were initially cheered that the group had not cut its dividend, but shares later fell as the market digested its 17% slump in pre-tax profits, an increase in bad debt provisions and a large pension deficit.

By far the biggest Footsie faller, however, was engineering group Invensys, which saw nearly £600 million wiped from its market value after warning of a slump in profits.

The debt-laden group said operating profits for the second half of its financial year – to March 31 – could fall up to 25% below that achieved in the first half.

Shares lost more than half their value, down 17p at 20p to value the firm at just £700 million.

News and information provider Reuters was another faller, slipping 4.5p to 150p amid worries that the group could announce further restructuring at its results next week.

But BSkyB, which was reporting six month figures, fared better. Shares rose 2%, up 14p to 598.5p, after saying it was on track to have seven million subscribers by the end of the year.

The biggest Footsie risers were Prudential, up 22.75p at 415p, Six Continents up 24p at 555p, BAE Systems up 4.75p at 115p and Royal & Sun Alliance up 3.25p at 93p.

Fallers were Invensys down 17p at 20p, Lloyds TSB down 31.25p at 400p, Schroders NV down 21p at 394p and ICI down 6.5p at 169.75p.