FTSE downbeat after Centrica, HSBC announcements

A downbeat update from energy giant Centrica today kept a lid on investors’ efforts to recover recent losses on the FTSE.

Concerns over the impact of rising electricity and wholesale gas prices on margins at British Gas contributed to Centrica shares falling 7%.

With a trading update from banking giant HSBC also failing to impress, the FTSE 100 Index mustered only an 10.4 point rise to 4698.8 by mid-morning.

This surprised analysts who had expected the Footsie to rebound above the 4700 barrier on the back of a positive performance on Wall Street overnight.

Centrica was the heaviest Footsie faller with a loss of 16.5p to 233.5p, even though it assured investors that it expected to meet market forecasts for both this year and 2005.

Shares in banking giant HSBC were little moved, up 0.5p at 873.5p, as its warning of a slowdown in UK consumer borrowing and an uncertain outlook overshadowed a “satisfactory” third-quarter performance.

Oil giants BP and Shell were 5p and 1.75p higher at 513.5p and 435.75p ahead of a key meeting of Opec in Cairo today, which is expected to confirm a cut in production.

Meanwhile, the insurance sector buzzed with news that FTSE 250 stock HHG was selling its UK life insurance business for £1.03bn (€1.5bn).

HHG rose 10% or 4.75p to 54p in the wake of the deal, which included a pledge to return £875m (€1.3bn) to shareholders.

The positive sentiment spilled across to larger rivals with Aviva rising 0.5p to 606p, Prudential cheering 5.5p to 441.25p and Legal & General up 0.25p at 107.5p.

Elsewhere, foam maker British Vita fell 3% or 8.25p to 258.25p after it warned that rising raw material prices would push profits slightly below the £50.7m (€73.3m) reported for 2003.