US interest rate confidence helps FTSE recovery

Receding fears of interest rate hikes in the United States helped the London market recover some of its earlier losses today.

After falling as much as 44 points during the late morning, the FTSE 100 Index fought back to close the day 23.5 points down at 4314.4.

The Dow Jones Industrial Average was trading 25 points ahead shortly after London’s close as economists and former Federal Reserve officials pointed to a slowdown in the Fed’s approach to rate rises.

They said an unexpected plunge in US job creation numbers last week meant a forecast quarter point rate rise tomorrow could be the last until after November’s presidential election.

On the corporate front, British Airways was near the top of the Footsie fallers after its announcement of higher fuel surcharges for long-haul passengers failed fully to tackle market concerns about the fuel bill it faces in this financial year.

Shares tumbled nearly 4% – off 7.5p to 205.5p – and came despite BA posting first quarter profits ahead of expectations at £115 million.

Aerospace group BAE Systems topped the fallers with a 7.75p loss to 203.25p, while Morrisons supermarkets was second, losing 6.5p to 171.25p.

Oil stock Shell topped the Footsie risers, up 5.25p to 394p, on rising oil prices and announcing a buyback of 1.4 million shares. BP also rose 1.75p to 501.25p.

In the FTSE 250 Index, lastminute.com continued to fall – down 4p to 94.5p - despite issuing guidance highlighting an improving trend for full-year earnings.

But retailer Woolworths gained 0.5p to 42.75p, after renewing a deal to supply CDs, videos, DVDs and computer games to Tesco.

The day’s biggest risers were Shell up 5.25p to 394p, AstraZeneca advancing 22p to 2408p, Kingfisher lifting 2.25p to 273.75p and Centrica gaining 1.75p to 239.25p.

The biggest fallers were BAE Systems, down 7.75p to 203.25p, Morrisons off 6.5p to 171.25p, British Airways falling 7.5p to 205.5p and Old Mutual retreating 3.5p to 98.75p.