Footsie loses ground as US hikes rates

London shares failed to make headway today as lower oil prices and the aftershock of a US interest rate rise dampened spirits.

Despite a session dominated by corporate results from retailers, mining and oil stocks had the biggest impact in sending the FTSE 100 Index 26.9 points lower to 4910.4.

With the cost of a barrel of US light crude falling back from its recent record levels to below 55 US dollars, oil giants BP and Shell racked up hefty losses.

BP lost 2% of its market value or 11p to 555.5p while Shell retreated 1%, down 4.5p to 481p.

The market was still feeling the impact of last night’s move by the Federal Reserve to hike US interest rates. Although the 0.25% increase was expected, the Fed’s comments about inflation triggered concerns of further moves in the future.

New York’s Dow Jones Industrial Average added to heavy losses seen in the wake of the rise to stand around 10 points down by the end of the day in London.

Meanwhile, minutes from the Bank of England’s rate-setting meeting strengthened the case for a rise in the cost of borrowing in the UK as it emerged that two members voted for a hike this month.

Analysts said the US jitters were behind an exodus from London’s mining stocks, with BHP Billiton and Xstrata both losing more than 3% of their market value, off 23p to 726p and 31p to 989p respectively.

On a busy day for corporate results, supermarket group Morrisons lost 3.5p to 198.25p after boss Sir Ken Morrison announced a major boardroom shake-up in the wake of last week’s profits warning.

Clothing retailer Next managed to claw back ground lost earlier in the session after it blamed cautious shoppers for a slowdown in sales at its high street stores since January. Shares climbed to the second highest spot on the Footsie risers board, up 19p to 1599p.

Outside the top flight, takeover target Woolworths slipped half a penny to 54p after warning that sales and margins were being hurt by tough trading conditions. Woolworths is waiting to see whether Apax Partners will make a formal £837 million bid.

Tile and flooring specialist Topps Tiles saw its shares slip 15% after it reported a sales slump in recent weeks, losing 33.25p to 189p.

But housebuilder Barratt Developments advanced 9p to 666p after saying buyers were still stepping on to the property ladder in sufficient numbers for it to meet its annual targets.

And food producer Dairy Crest cheered 2%, up 10p to 431p, as it pledged to meet expectations on full-year results after overcoming an “extremely competitive” market.

The highest Footsie risers today were Unilever rising 7p to 507p, Next up 19p to 1599p, Cadbury Schweppes rising 5p to 525.5p and Pearson up 6p to 633.5p.

The heaviest fallers were Amvescap down 11.5p to 333.5p, BHP Billiton off 23p to 726p, Xstrata down 31p to 989p and Schroders off 20.5p to 722.5p.