Footsie closes in the red

The London market closed in the red today amid downbeat results on Wall Street and fresh fears about UK interest rate rises.

After spending most of the session above the waterline, the FTSE 100 Index succumbed to stand 5.6 points adrift at 4818.3.

US stocks fell as disappointing profit reports from companies including mobile phone firm Motorola eclipsed economic figures showing declines in consumer prices and jobless claims.

The Dow Jones Industrial Average gave up some of yesterday’s gains, slipping about 27 points adrift by London’s close.

On the economic front in the UK, official figures showing a sharp rise in employment sparked further concerns about a sixth interest rate rise.

However, gloomy news came in the form of figures showing that more manufacturers were freezing pay than at any time for more than a year, indicating firms fear a more difficult year ahead.

On the corporate front, upbeat results from retailers had helped to keep the Footsie in positive territory for most of the day.

Second-tier stationery retailer WHSmith buoyed sentiment with news that its recovery programme was on track following a substantial profits improvement. Shares were near the top of the FTSE 250 with a 5% or 19p advance to 359.25p.

Shares in Ted Baker moved ahead 3%, or 17.5p to 508.5p, after analysts said a 20% rise in pre-Christmas sales meant it was probably one of the period’s top performing retail stocks.

Chemists’ group Boots recovered earlier lost ground to stand 2.5p ahead at 662p after saying like-for-like sales had lifted 2.6% in the run-up to Christmas.

Other retailers were also making the headlines, with Somerfield losing a penny to 153p after revealing a decline in like-for-like sales in the 10 weeks to November 6.

However, upmarket clothing group Austin Reed lifted 8% or 10p to 132.5p following its announcement that annual results were likely to top expectations.

But Poundstretcher group Brown & Jackson tumbled nearly 16% or 9.5p to 50p after it shocked investors with a profits warning.

Outside the retail sector, shares in BT slipped after the European Commission announced an inquiry into whether the Government’s preferential business tax rates to the company and industry rival Kingston Communications breach EU fair trade rules. BT dropped 5.75p to 206.5p and Kingston lost 0.75p to 62.5p.

Pubs group JD Wetherspoon was among the second-flight risers, lifting 5.75p to 259p after it unveiled an improvement in trading, but said high overheads and strong price competition continued to cause it problems. Rival pub company Mitchells & Butlers did better, lifting 2% or 7.75p to 335p.

Shares in Barratt Developments put on a penny to 588p after the housebuilder became the latest in the sector to forecast record profits despite the house price slowdown.

The day’s biggest winners were Emap, up 25p to 835p, Sage Group advancing 3.75p to 197.25p, Smiths Group lifting 15.5p to 850p and Northern Rock adding 14p to 781.5p.

Largest losers were Imperial Tobacco, down 55p to 1395p, Pearson off 17.5p to 620p, BT dipping 5.75p to 206.5p and British Land retreating 17p to 883p.