Oil price rises keep Footsie down

London shares ended Wednesday on a low note after oil prices resumed their upward trend and upbeat US economic news stoked interest rate fears.

The FTSE 100 Index retreated back to just above the key 4800 threshold by the close, standing 41 points down at 4806.

Top flight stocks extended earlier losses ahead of the close on the back of reports of lower US crude oil stocks.

The news fuelled a rise in the futures price of a barrel of US light crude to 44 US dollars, although it moved back down to 43.3 dollars in afternoon trading.

Data showing non-manufacturing orders were on the increase also stoked fears of inflation and interest rate rises in the US, although investors shrugged those off to send the Dow Jones Industrial Average up 22 points shortly after the end of trading in London.

Retailers were the main culprits in pulling the Footsie down as fears about a poor festive performance by the sector continued to weigh on investors’ minds.

Shareholders reacted negatively to news from Next that it was shaving its profits forecasts due to excess stock.

Although Next said it had a strong Christmas, the shares were fourth in the Footsie fallers, losing 3% or 54p to 1627p.

With investors fearing a generally poor performance by retailers over Christmas, other store groups followed Next down. Argos owner GUS retreated 21.5p to 928p, Marks & Spencer was off 6p to 338p, Dixons was down 5.5p to 150p, Boots Group fell 14p to 634p and Sainsbury’s dipped 6p to 266.75p.

House of Fraser also retreated 1% or 1.5p to 113.25p after reporting negative sales in the last five months yesterday.

The downbeat sentiment was contradicted by a more positive survey from employers body the CBI, indicating retailers saw a surprise hike in sales growth in the first two weeks of December.

Insurers ended the day at the top of the Footsie risers after broker Morgan Stanley raised its price targets on UK and European groups in the sector.

Legal & General led the Footsie pack with a 1% or 1.5p gain to 112.75p. Friends Provident and Aviva were next up with rises of 1.25p and 4.5p to 159p and 639.5p respectively. Royal & Sun Alliance also put on 0.5p to 81p, although Prudential bucked the trend with a 3.25p loss to 456.75p.

Shares in brewer Scottish & Newcastle dropped 1% or 4.5p to 433p after the Competition Commission said the proposed acquisition by its technical equipment joint venture SDE of Coors’ beer dispensing equipment operations was anti-competitive.

In the FTSE 250, Branston Pickle maker Premier Foods lost 4.5p to 270.5p after estimating it lost at least £10 million in sales because of a fire at its Suffolk factory.

Drug maker Acambis saw its stock lift 4p to 255p after saying US regulators had agreed to speed up the approvals process of one of its key smallpox vaccines.

Biggest winners included Legal & General, up 1.5p to 112.75p, Friends Provident advancing 1.25p to 159p, Aviva adding 4.5p to 639.5p and Scottish & Southern Energy moving 5.5p ahead to 880p.

Largest losers were William Hill, down 28p to 555p, Allied Domecq losing 21p to 503.5p, BOC off 37p at 979p and Dixons weakening 5.5p to 150p.