Footsie fails to shake off oil price fears

Fears about oil supplies kept the London market firmly in negative territory today.

The FTSE 100 Index moved in a narrow range during the day, ending the session 13.4 points down at 4685.5.

Although oil cartel Opec claimed it was in a position to increase crude output, nervousness about supplies kept traders cautious as the price of a barrel of US light crude topped 53 US dollars.

The City lacked any impetus from Wall Street, where the markets were closed for a public holiday.

Economic news in London was not providing much support for shares either, with Government figures showing a slowdown in house price growth in August.

Record oil prices took the blame for the sharpest annual rise in the cost of goods leaving UK factories in more than eight years.

Supermarket group Sainsbury’s and banking giants Lloyds TSB and Barclays provided the main interest during an otherwise lacklustre session.

Shares in the retail group fell 2p to 250p after its latest guidance on half-year profits came in below City expectations.

The stock is now at a one-year low, but was still propped up by bid speculation and the belief among traders that the content of a strategic review by chief executive Justin King next week was of more long-term importance.

Another struggling heavyweight – Marks & Spencer – slipped 1.75p to 343p as investors prepared for a second quarter trading update tomorrow. There was also research that showed M&S had fallen to joint fourth in the childrenswear market.

As well as retail, one of the other areas of interest proved to be the banking sector after rumours again circulated of a Citigroup takeover of either Barclays or Lloyds TSB – both ahead 2p at 572p and 448.5p respectively.

Among other financial stocks, Royal & Sun Alliance rose 0.5p to 76.75p after announcing plans to transfer more than 1,100 jobs to India over the next few years. Rival Prudential added 6.5p to 485.5p, although Norwich Union owner Aviva dropped a penny to 567p and Legal & General also bucked the positive trend in the sector, falling 0.25p to 102p.

Elsewhere, mobile phone group Vodafone was proving a drag on the market with a fall of 1.25p to 136.25p while BT Group slipped 4p to 181.75p.

Pharmaceuticals group AstraZeneca was another faller early on, but news that the US Food and Drug Administration had blocked its blood-thinning drug Exanta came as little surprise and left shares up 15p at 2180p.

Outside the top flight, shares in Manchester United were further fuelled by speculation that US tycoon Malcolm Glazer could be about to table his bid for the club. The stock rose 8.5p to 280.5p, although still some way off the 300p minimum that its largest shareholder, Cubic Expression, is believed to want.

The day’s biggest risers included Enterprise Inns, ahead 10p to 577p, Gallaher up 10p at 663p, Prudential gaining 6.5p to 485.5p and Rentokil Initial climbing 1.75p to 154.75p.

Biggest fallers included BT Group, down 4p to 181.75p, Reuters off 6.5p to 339.5p, GlaxoSmithKline losing 19p to 1156p and ICI falling 3.5p to 216.5p.