Footsie in the red

The London market failed to extend a recent rally today as investors found few reasons to commit their cash.

The London market failed to extend a recent rally today as investors found few reasons to commit their cash.

The FTSE 100 Index closed 3.6 points lower at 5046.8, leaving it just short of last night’s three-month high.

Telecoms groups did their best to move shares higher after an upbeat note on Cable & Wireless from broker ABN Amro sent it to the top of the Footsie risers board. The stock cheered 2.25p to 142p and was followed by O2, rising 2p to 127.25p.

But on a quiet day for corporate news, there was little else to inspire traders. New York’s Dow Jones Industrial Average stood just slightly higher by the end of trading in London.

Economists were disappointed that CPI inflation in May failed to retreat from its seven-year high of 1.9%, saying it supported the view that interest rates would stay on hold for the rest of this year. However other measures of inflation were better than expected.

One trader said: “Although the Footsie looks to be well clear of 5,000 for now, it’s still open to debate as to whether this will prove sustainable.”

ITV was another top flight riser – up 1.5p at 117.25p – as investors look ahead to the decision by regulator Ofcom on new licence fee terms.

Leisure giant Whitbread was doing its best to lift spirits after investors changed their negative stance to today’s update on trading.

Whitbread said it had begun the year positively despite a weak performance at its pub restaurants where like-for-like sales declined by 1%. Its shares moved 11.5p higher to 927p to stand fifth on the risers board after slipping earlier on.

But two of the blue-chip stocks that set the pace for the market yesterday suffered a reversal of fortunes.

Royal & Sun Alliance lost 0.75p to 83p as traders become more sceptical that an offer for the insurer from the investment vehicle of financier Andrew Regan will emerge. Building materials group Hanson was also in the red, dropping 1% or 7p to 532p as bid rumours dissipated.

Elsewhere, washroom services group PHS fell half a penny to 101.5p as annual profits of £47.5 million met hopes and investors waited for recent bid approaches to become formal offers.

Tour operator First Choice lost 3p to 183.5p despite reporting strong summer bookings and posting narrower half-year losses than had been expected in the City.

Shares in magazine publisher Future slumped more than 7% after it adopted a cautious stance to the short-term outlook. The group, whose titles include Xbox and Guitar World saw its stock slide 6.5p to 80.5p.

The highest Footsie risers today were Cable & Wireless up 2.25p to 142p, O2 adding 2p to 127.25p, Marks & Spencer up 5.25p to 346.75p and ITV 1.5p higher at 117.25p.

The heaviest fallers were British Airways down 6.25p to 274.5p, Shire Pharmaceuticals off 12.5p to 596p, Tesco down 4.5p to 312.5p and Aviva off 8.5p to 608.5p.

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