Oil stock losses, Chinese interest rate hike conspire against FTSE

Losses by oil stocks and a surprise interest rate hike in China took their toll on the London market today, leaving it on course for a lacklustre end to the week.

The FTSE 100 Index felt the fallout from Beijing’s first interest rate rise for nine years, falling 5.2 points to 4637.6 by mid-morning.

Overnight the Japanese Nikkei had closed 81 points down as a result of the news.

David Buik of Cantor Index said the reaction to China’s “rather feeble” attempt to douse down its over-exuberant economy may well have been overdone.

“But nonetheless the world’s economy has certainly been delivered a warning shot across the bows,” he added.

Oil companies suffered the heaviest falls today as investors fretted at the impact of the lower cost of crude.

Cairn Energy slipped nearly 2% or 23p to 1449p, while Shell retreated 6.5p to 429p, losing yesterday’s gains sparked by plans to scrap its historic twin-board structure.

Those trying to keep the Footsie afloat included supermarket giant Sainsbury’s which was the highest top flight riser after reports said it was lining up a team to defend itself against a possible takeover bid. Shares lifted 2% or 5.5p to 264.5p.

On a lacklustre day for corporate news, Aviva advanced 4p to 549.5p after reporting early signs of recovery in the UK market for its products and posting an 11% rise in total life and pensions new business to £10.8bn (€15.5bn).

Elsewhere, home shopping company Ideal Shopping Direct saw its shares soar 21p to 143.5p after it announced trading had exceeded expectations.

Photographic specialist Jessops was forced to cut its flotation price amid tough stock market conditions, setting a level of 155p as conditional trading in the shares began before full trading starts next week.