Elections fears hold Footsie back

Fears that the US election will be decided in the courts rather than the ballot box were helping to undermine confidence among investors today.

With polls showing George Bush neck-and-neck with presidential challenger John Kerry, the FTSE 100 Index enjoyed a topsy-turvy session to stand 9.5 points up at 4574 by mid-morning.

Analysts at Barclays stockbrokers said sky-high oil prices and a weak US dollar were adding to concerns that a repeat of the 2000 race for the White House was on the cards, with the outcome not known for several weeks.

Barclays said: “This is the worst possibility for financial markets, which are not choosy between Mr Bush and Mr Kerry as long as there is a clear winner.”

The Dow Jones Industrial Average slumped to its lowest point in 2004 overnight, although a seven-point loss was better than expected after some heavy selling early on.

BP was among the heaviest fallers in London as investors fretted that the oil giant will not buy back as many shares next year as in 2004, opting instead to spend money on infrastructure.

Profits of 3.94 billion US dollars (£2.14 billion) also failed to impress as BP shares slipped 3.5p to 534p. Shell was down 0.25p at 414.25p, but Cairn Energy was 6p higher at 1470p.

Cigarettes group BAT was also off colour despite announcing a 20% rise in profits and saying a business-transforming deal in the United States had shown early promise. Shares were 2p down at 816p.

Insurer Friends Provident was up 2p at 137.5p after announcing plans to buy Luxembourg-based life assurer Lombard for £183 million.

Elsewhere, housebuilders were in the money after Westbury unveiled a 22% rise in half-year profits to £58 million and said it remained convinced of the sustainability of the UK housing market in the longer term.

Westbury shares cheered 12p to 381p, while Barratt Developments rose 22.5p to 522p and Bovis Homes leapt 21.5p to 534p.

But shares in lastminute.com shed nearly 2% or 1.5p to 103.5p after chairman Allan Leighton said he was stepping down.