Continuing oil fears send FTSE down almost 40

Pressure from sky-high oil prices and a downbeat mood across the Atlantic conspired to send the London market further into the red today.

Fears for the long term future of the UK economy were also to blame for the FTSE 100 Index falling 37.6 points to 4647.9 by the end of the session.

Analysts said a surprise fall in the rate of inflation and Brent crude trading at nearly $52 a barrel was prompting concerns about the UK’s long term economic prospects.

“There’s a very real chance that the high interest rates are going to see manufacturers struggle whilst leaving consumers reluctant to spend in the run-up to Christmas,” said dealer Geoff Langham at broker deal4free.com.

A surge in the cost of a barrel of crude oil in New York through the $54 mark took its toll on shares.

And trading across the Atlantic delivered negative momentum, with the Dow Jones Industrial around 40 points lower by closing time in London.

The Footsie had ended yesterday in the red after ailing supermarket group Sainsbury’s warned on profits for the third time since March.

There was further gloomy news from the sector today as Marks & Spencer reported a further deterioration in food sales during the final two weeks of a troubled half year.

But the shares were second in the Footsie risers, lifting 1% – or 4.5p to 347.5p – as investors expressed relief at an accompanying half-year results forecast from the company showing profits would still be at the upper end of market forecasts. Rival Next also lifted 11p to 1700p.

Sainsbury’s continued to suffer from the disappointment of yesterday with a fall of 6p to 244p. Tesco was also off 0.25p to 287p, although Morrisons made it into the black, climbing 1.25p to 194.5p.

Casualties of the soaring oil price included British Airways, which was high in the Footsie fallers with a decline of 5.25p to 199.5p and building products company Hanson, which dipped 8.5p to 412p.

Cable & Wireless weakened 0.25p to 97.75p, despite an early surge of nearly as it benefited from a broker upgrade.

Meanwhile, shares in airports operator BAA dropped 3.5p to 566p despite traffic statistics for September showing that passenger numbers rose 5.4% to 13.1 million against the same month last year.

Elsewhere, printer St Ives saw 4% knocked off its share price, which fell 15.5p to 369.25p, after it unveiled a 57% fall in bottom line pre-tax profits amid continuing difficulties in most of its markets.

Construction group MJ Gleeson was down after saying annual profits rose 86% to £17.6m but warning the recent slowdown in the housing market may prevent a further significant uplift. Shares fell 7.5p to 209p.

The highest climbers in the Footsie today were Imperial Tobacco up 23p to 1248p, Marks & Spencer rising 4.5p to 347.5p, Kingfisher up 3.75p to 313.25p and United Utilities rising 5p to 566.5p.

The heaviest fallers were Amvescap down 12p to 304.5p, Reuters off 12p to 327.5p, Hays down 4.25p to 132p and Prudential off 14.5p to 471p.