Footsie stays in the red

The London market spent a second session in the red today as poor weekly jobless data in the US snuffed out hopes of an afternoon rally.

Only tobacco group Gallaher was able to claw its way to a gain of more than 2% on a day when the FTSE 100 Index closed 24 points lower at 4568.3.

Traders said profit-taking partly explained the fall, which followed a strong run for the Footsie to a new two-year high this week.

A moderate rise in the US weekly jobless claims released today also undermined confidence, with the Dow Jones Industrial Average off another 40 points in early trading across the Atlantic.

Further evidence of a cooling in the UK property market emerged as the International Monetary Fund warned that rising interest rates could trigger a house price crash in the UK.

The Washington-based group said the value of property in the UK had nearly doubled since 1997, largely as a result of strong growth in disposable income and falling interest rates.

At the same time, oil prices continued to give traders a headache as the cost of a barrel of US light crude moved above 48 dollars a barrel.

Geoff Langham, head of trading at deal4free.com, said: “If oil prices continue to rise – and specifically if we see a move past last month’s high - equities will be looking very exposed.”

Tobacco companies were among a clutch of top-flight stocks to make gains in London, with Gallaher leading the risers board with a gain of 20p to 643.5p. Imperial Tobacco was also up 12p to 1220p, while BAT advanced 12.5p to 817.5p.

Brewing giant SABMiller was ahead by 0.5p to 717p after reporting a strong performance in the first five months of its financial year.

But oil giants Shell and BP were down, despite oil prices moving close to their recent record high. BP weakened 2.5p to 531.5p, while Shell lost 11.25p to 406.75p.

Financial stocks struggled on a day when Barclays fell more than 4% as investors gave a lukewarm reception to news that it was in talks to take a majority stake in South African bank ABSA. Barclays closed 24.5p lower at 520p.

Some of the biggest news came from the FTSE 250, with estate agency group Countrywide losing 11%, down 37p to 285p, as it warned annual results would be below current expectations.

This combined with the IMF warning to send housebuilders lower as Taylor Woodrow weakened 13.75p to 269.5p, George Wimpey fell 24.75p to 398.5p, Westbury lost 21.25p to 413p and Persimmon dropped 41p to 643p.

Low-cost airline easyJet also retreated 11p to 128p despite forecasting that profits would fly higher than expected in 2004.

The Luton-based airline said full-year profits were now expected to top £60 million – at least 16% higher than in 2003.

The biggest risers in the Footsie today were Gallaher, up 20p to 643.5p, BAT adding 12.5p to 817.5p, mmO2 up 1.25p to 95p and Smiths Group adding 9.5p to 739.5p.

The heaviest losers were Barclays, down 24.5p to 520p, Reuters off 12.75p to 317.25p, Tomkins down 9.25p to 259p and Man Group off 38p to 1223p.