FTSE loses most of morning's rises

The London market ended near its opening mark today after Wall Street opened down on renewed US rate rise fears.

After moving 24 points ahead earlier in the session, the FTSE 100 Index retrenched to close just 4.2 points higher at 5057.4.

The Dow Jones Industrial Average slipped 38 points to 10796 after London’s close as US investors reacted nervously to the second day of testimony to Congress by Federal Reserve chairman Alan Greenspan.

Equities came under pressure as investors interpreted his latest comments on the US economy as implying that rates may have to go up more than expected.

Back in London, there was a mixed reaction to news that retail sales recovered in January after a weak run-up to Christmas. While some analysts said they continued to believe interest rates had peaked and would remain on hold in 2005, others forecast both a rise and a cut later in the year.

On the corporate front, Cairn Energy and publisher Reed Elsevier were among those making significant progress.

Media stocks attracted investors after Reed said it was confident of strong growth in 2005 – making it the session’s highest climber. Shares cheered 7% or 37.25p to 533.5p.

Also on the move were Reuters, up 1.75p to 421.75p and FT owner Pearson, which strengthened 2% or 14p to 662p.

Shares in Cairn Energy were second in the risers with a 6% or 64p bounce to 1130p, after positive drilling results in India added to momentum generated by a rising oil price. The news encouraged investors to take another look at rivals BP and Shell – up 2.5p and 4p to 557.5p and 485p respectively.

Steel giant Corus was another of the day’s winners after saying it planned to invest £130 million in a restructuring that will involve enhancing one of its biggest steelmaking plants at Scunthorpe. Shares moved 2p higher to 62p.

Drinks giant Diageo, which makes brands such as Guinness and Smirnoff vodka, dropped 5p to 740p despite a 4% rise in annual sales.

B&Q owner Kingfisher topped the Footsie fallers board after announcing disappointing fourth quarter sales figures for its B&Q and Castorama chains. Shares were off 7.25p at 295p.

Outside the top flight, Amstrad lost earlier gains to stand 0.75p off at 183.25p despite saying that sales had more than doubled on the back of strong demand for set-top boxes.

But car dealership Pendragon was the second highest FTSE 250 riser after saying strong demand for company cars helped fuel a 47% rise in full-year profits to £65 million, beating analysts’ expectations. The stock moved up 7% or 21.5p higher to 313p.

The day’s biggest risers were Reed Elsevier, up 37.25p to 533.5p, Cairn Energy adding 64p to 1130p, mmO2 putting on 4.25p to 129.75p and Corus gaining 2p to 62p.

Biggest fallers included Kingfisher, down 7.25p to 295p, Antofagasta losing 27p to 1319p, Sage Group off 4.25p to 208.25p and ITV weakening 2p to 121.5p.