FTSE fails to break back through 4400 barrier

A late-afternoon rally by London shares failed to lift the FTSE 100 Index back above the 4400 barrier today.

After dipping more than 30 points earlier in the session, the Footsie managed to mirror slight gains across the Atlantic to close 22.7 points higher at 4381.1.

News that the Bank of England was keeping interest rates on hold was widely expected by traders and barely moved the index.

The Dow Jones Industrial Average – which was around 20 points higher by closing time in London – lent a degree of support after US weekly jobless claims beat expectations.

Geoff Langham, head of trading at deal4free.com, said there was a real chance the index could hit the low 4300 and that this was leaving traders in a cautious mood.

But he added: “Hopefully the corporate reporting we’re going to see in the next couple of weeks will in turn bring some cheer to equities.”

In London, retailer Marks & Spencer was in the red after it rejected a £9.1bn (€13.6bn) takeover bid from tycoon Philip Green.

Shares in M&S weakened more than 1% as the group said Mr Green’s “final proposal” of 400p per share continued to undervalue the group and its prospects.

Although the stock was the heaviest faller among blue-chip stocks in early trading, it regained some of these losses to stand 4.5p lower at 363.75p by the end of the day.

Spirits group Diageo also featured among the Footsie fallers after saying that currency swings were expected to slash profits by up to £100 million. Shares lost nearly 2% of their value, down 12.5p to 712.5p.

Electrical retailer Dixons was in the red – off a penny to 161.5p – after boosting its European portfolio by acquiring a controlling stake in a Greek chain.

In contrast, medical devices company Smith & Nephew was helping to lift the mood. Gains of 4% or 25p to 614p made it the highest top flight climber.

There were mixed fortunes among the major financial stocks following the interest rates decision. Although Abbey National was 18.5p higher at 500p and Royal Bank of Scotland added 24p to 1563p, Lloyds TSB drifted 1.25p lower to 409.5p.

Elsewhere, discount retailer Matalan lost 6p to 205.25p even though it reported a further lift in trading.

And housebuilder Taylor Woodrow retreated a penny to 244p despite predicting annual profits towards the upper end of market expectations.

The group said it expected the UK housing market to remain reasonable for the rest of 2004, allowing it to deliver “another set of good results”.

But support services and shipbuilding firm VT Group cheered 6.5p to 268.75p after announcing it had struck a £100 million deal to manage the Royal New Zealand Navy’s main dockyard.

The biggest climbers in the Footsie today were Smith & Nephew up 25p to 614p, Abbey Natonal ahead 18.5p to 500p, Morrisons up 5.25p to 194.25p and Gallaher ahead 14.5p to 669p.

The heaviest fallers were British Airways down 7.5p to 254p, Amvescap off 9.5p to 336.5p, ICI down 5.25p to 215.75p and WPP off 10.5p to 524p.