Worse-than-expected economic news from across the Atlantic prompted a sell-off of London shares today.
The FTSE 100 Index dipped below the 4800 barrier for the first time this year, leading one market watcher to suggest the recent rally that has taken it to 30-month highs could be over.
With banking and oil stocks firmly in the red, the Footsie closed 35.1 points lower at 4783.6.
Sentiment was also weakened by news that the US trade deficit for November was 60.3 billion US dollars against expectations of 56 billion US dollars.
A renewed surge in oil prices above the 46 US dollar mark gave a further jolt to the Dow Jones Industrial Average, which was flat by the end of the day in London.
Oil stocks BP and Shell were down after data showed what analysts described as “mediocre” US crude stocks. BP weakened 1.5p to 506.5p despite announcing that it was expecting a 10% rise in production in 2004 against the previous year. Rival Shell slipped 3.25p to 442p.
Financial stocks were a sea of red, led by Prudential which fell 10.25p to 452.25p. Royal Bank of Scotland was another heavy faller, off 24p to 1748p, while Lloyds TSB retreated 6.25p to 466p.
The downbeat mood came despite a potential major takeover in the building industry.
Construction industry stocks rose following news that Swiss-based cement maker Holcim had made an approach to second tier UK group Aggregate Industries. Shares lifted 23% or 26p to 140p after Aggregate’s board said it would recommend the 138p-per-share bid if the group went ahead with a formal offer.
Building materials group Hanson was the highest Footsie climber – up 4% or 19.5p to 481p, while second-tier stone products maker Marshalls also advanced 13p to 317p.
Electrical retailer Dixons was another top-flight riser after strong performances from its Currys and Dixons chains prompted a 2% rise in UK Christmas sales. The stock rose half a penny to 157p, although earlier in the session gains had been much bigger.
Fashion house Burberry was one of the heaviest FTSE 250 fallers after it said UK trading was disappointing. Shares lost 12.25p to 405.5p despite a 7% rise in total third-quarter revenues.
Car insurer Admiral saw its shares fall 3% – off 10p to 331.5p – as it said the industry was braced for a gradual decline in profitability.
Kitchen equipment group Aga Foodservice was in the black after saying a drive to promote its products as gifts contributed to a rise of more than 20% in festive sales. Shares rose 3% or 9.25p to 280p.
Elsewhere, Garfunkel’s owner The Restaurant Group lifted 0.5p to 124p after reporting mixed December trading, although its second half was described as encouraging.
The highest Footsie risers were Hanson up 19.25p to 481p, Johnson Matthey rising 31p to 999p, BAA up 11p to 586p and Tate & Lyle rising 7.75p to 466.75p.
The heaviest top flight losers were Shire Pharmaceuticals down 16p to 599p, Daily Mail & General Trust off 17.5p to 726p, Prudential down 10.25p to 452.25p and GlaxoSmithKline off 26p to 1197p.