Ex-dividend stocks reduce FTSE optimism

The FTSE 100 Index gave up another 40 points today after a clutch of stocks went ex-dividend and an update from a US tech giant knocked confidence.

Market heavyweights Shell and BP were among those to go ex-dividend – meaning investors lose the right to the latest payout – as the Footsie continued its recent volatile run to close 38.7 lower at 4312.2.

The mood was also influenced by a lacklustre start to trading in New York, where the Dow Jones Industrial Average gave back some of last night’s 130 point rise following a disappointing trading forecast from Cisco Systems.

Today’s decline for the blue-chip index came despite some encouraging news on interest rates after the Bank of England indicated borrowing costs may not have to rise by as much as many economists had been expecting.

The price of oil also slipped back from record highs, adding to the dividend related losses of BP and Shell – off 12.5p and 11.75p at 494.5p and 389.75p respectively.

Among other companies going ex-dividend, insurer Aviva fell 13p to 512p, Royal Bank of Scotland slipped 31p to 1471p and miner RioTinto eased 33p to 1356p.

All of the banks were in negative territory with Barclays losing some of the strength seen on the back of rumours of a takeover by Citigroup. It fell 4.5p to 511.5p.

Insurer Royal & Sun Alliance was also in the red, falling more than 2% or 1.75p to 68.75p, as investors prepared for half-year results tomorrow.

On a brighter note, the weaker oil price helped British Airways to rise 4p to 209.75p, while BAE Systems gained 2p at 201.75p as its joint venture Eurofighter jet went on show at the company’s Lancashire base.

Pest control firm Rentokil Initial was at the top of the Footsie risers board as fresh talk of a potential break-up of the troubled group circulated. Shares rose more than 2% or 3.75p to 151.5p.

Outside the top flight, engineering group Jarvis fell more than 6% after it said the completion of its 2004 audit would result in a £9 million increase in pre-tax losses. Shares slipped 2.5p to 38.25p.

And rival business Balfour Beatty was also on the back foot, easing 5.75p to 260p as news that its chief executive was stepping down overshadowed a 33% rise in underlying interim pre-tax profits to £68m (€101.8m).

Elsewhere, home furnishings retailer Homestyle slipped more than 2% after revealing plans to sell its Bensons Beds business. With annual losses widening to £107.8m (€161.4m) from £9.8m (€14.7m), shares dipped 2p to 106.5p.

And soft drinks group Nichols failed to hold on to modest gains achieved after announcing plans to offload its food manufacturing arm and focus on selling products such as Vimto and Sunkist. Shares closed a penny lower at 140p.

The biggest Footsie risers were Rentokil Initial up 3.75p at 151.5p, British Airways ahead 4p at 209.75p, Allied Domecq up 7.25p at 437.25p and Capita Group ahead 4.75p at 298.75p.

The biggest fallers were Shell down 11.75p at 389.75p, Royal & Sun Alliance off 1.75p at 68.75p, Lloyds TSB down 10.25p at 403p and Aviva off 13p at 512p.