Footsie falls amid oil price fears

Top flight shares ended the day heavily in the red despite a better-than-expected start to trading in New York.

The FTSE 100 Index succumbed to jitters about oil prices and the weak dollar to close the session 50.9 points down at 4564.5.

The Dow Jones Industrial Average also lost nearly 50 points in early trading, but recovered to stand 12 points off shortly after London’s close.

Friday’s sell-off on Wall Street left investors in a bearish mood today, while US light crude prices hovering above 54 US dollars a barrel also were not helping sentiment.

The renewed spurt in oil prices followed a possible shipping strike in Norway, which sparked new fears that supplies could be disrupted.

The massive US budget deficit, the marginally disappointing fourth quarter outlook and the inconclusive signs about the US presidential election were also adding to the uncertainty.

After spending much of the day at the top of the Footsie on the back of speculation that City financier George Magan was in the preliminary stages of a £5 billion takeover bid, ailing retailer Sainsbury’s lost ground to close 0.5p down at 246p.

Cigarettes group Gallaher was one of only five Footsie risers, up 2p at 667p, as worried investors switched into defensive stocks. Another industry stock, Imperial Tobacco, had also made it on to the shortlist of Footsie risers, but later slipped 5p to 1255p.

Marks & Spencer added 1.5p to 358.5p after setting the strike price of its tender offer at 362p, which will see more than a quarter of its stock repurchased and cancelled.

But stocks from a range of sectors were mired in negative territory, led by ITV which fell 3.5p to 101.25p, medical devices group Smith & Nephew off 15p at 464.5p and the company that runs London’s congestion charge, Capita, off 8.5p to 349.5p. Mining group Xstrata was in the doldrums, down 8.5p to 879.5p and insurer Legal & General weakened 2p to 98.5p.

Elsewhere, Manchester United fell 6p to 277.75p after calling off takeover talks with American sports tycoon Malcolm Glazer.

Magazine publisher Emap lost 2% or 16p to 770p as it announced the launch of the UK’s first weekly glossy magazine for women.

But there was better news for investors in Warner Chilcott after the drugs group confirmed a higher takeover proposal that would value the company at more than £1.5 billion.

With two other groups examining its books and a bidding battle looming, Warner shares cheered 19p to 837.5p.

Aerospace group Meggitt saw its shares lose 1.75p to 246.25p despite saying it had boosted its defence portfolio with a £2.9 million deal for a Canadian military vehicles maker.

The day’s biggest winners were BOC Group, up 6.5p to 881p, Marks & Spencer gaining 1.5p to 358.5p, Shire Pharmaceuticals putting on 1.75p to 518.75p and Gallaher lifting 2p to 667p.

Largest fallers included ITV, down 3.5p at 101.25p, Smith & Nephew off 15p at 464.5p, Capita Group losing 8.5p to 349.5p and WPP Group shedding 12p to 523.5p.