FTSE losing momentum

The London market lost some of its new-found momentum today as investors worried about higher interest rates.

The London market lost some of its new-found momentum today as investors worried about higher interest rates.

After rising 52 points earlier in the session, the FTSE 100 Index settled back to stand 37.9 points ahead at 4377.3 by the close.

A strong start on Wall Street helped the Footsie notch up its second successive session of gains, with the Dow Jones Industrial Average rising 66 points shortly after London’s close.

Soothing comments from Federal Reserve chairman Alan Greenspan on the US economy added to the positive mood.

But the Bank of England fuelled speculation about a hike in interest rates next month in the minutes of this month’s Monetary Policy Committee meeting.

The MPC noted that rates were likely “to increase further“, with some members debating the need to move cautiously.

Investors are also expected to pay close attention to tomorrow’s official retail sales data for further rate pointers.

After initially cheering the decision by mobile phone operator mmO2 to raise its UK revenues guidance, investors pulled back to leave the stock 0.75p lower at 88.75p.

Rival Vodafone lost earlier gains, but still managed to end the day a penny in the black at 118.25p ahead of its own performance update on Monday.

The positive mood also helped Virgin Mobile, which made its stock market debut with conditional dealings in shares rising a penny from their 200p starting point.

Retailer GUS came third in the Footsie risers board – ahead more than 3% or 29p to 852.5p – after another strong sales performance from its Argos chain.

British Airways also put back recent losses with a Footsie-leading gain of 11p to 247p. Analysts said general market strength was driving the stock after hitting year lows.

Ahead of updates over the coming days, the banking sector made healthy gains with Lloyds TSB up 10.25p to 406.5p, Abbey National 10.75p stronger at 479.75p and HBOS up 9.5p at 686p.

Rumours about Bradford & Bingley becoming a bid target left its stock fourth in the risers board, up 8.25p at 262.25p – a 3% rise.

One of the few downbeat notes from the session came from Cable & Wireless after it reported a 9% fall in first quarter revenues and said trading conditions had continued to be tough. Shares fell 4% or 5.25p to 108.5p.

Confectionery group Cadbury Schweppes was also in the red – down 18.25p to 455p – despite posting results in line with expectations after a surge in demand for diet soft drinks in the United States.

Outside the top flight, shares in bookmaker and casino operator Stanley Leisure gained 7% after the group said the rollout of more gaming machines helped lift results to the top end of forecasts.

Telecoms group Colt also rose 4.5p to 42.75p after meeting recently lowered profits expectations.

Biggest risers were BA, up 11p to 247p, Shire Pharmaceuticals ahead 17.25p to 462.25p, GUS lifting 29p to 852.5p and Bradford & Bingley advancing 8.25p to 262.25p.

Largest losers included Cable & Wireless, down 5.25p to 108.5p, Cadbury Schweppes losing 18.25p to 455p, British Land off 21.5p to 709.5p and BG Group retreating 7.25p to 340.25p.

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