FTSE in the red

The FTSE 100 Index ended today firmly in the red after a poor opening on Wall Street dragged banking stocks down.

After hitting an intra-day high of 5258.4, the Footsie fell back to close the session 16.6 points off at 5214.2.

The Dow Jones Industrial Average was nearly 26 points off shortly after London’s close following lacklustre numbers from the banking sector.

The two biggest banks in the US, Citigroup and Bank of America, said declines in fixed income trading revenue had hit second quarter profits.

British banking stocks fell in sympathy, with all major players in the sector apart from HSBC and Northern Rock in negative territory. Barclays was the sector’s biggest faller, easing more than 1% or 7.5p to 568.5p.

Reports of merger talks between Cable & Wireless and rival telecoms firm Energis had given the Footsie early impetus.

Shares in C&W ended the day at the top of the blue chip index, lifting more than 2% or 3.5p to 147.5p – within a whisker of its highest mark for more than a year.

However, the market quickly retreated in late morning trading as caution set in among investors in the big metals firms.

BHP Billiton and Xstrata lost 6.5p to 741.5p and 6p to 1127p respectively following overnight news that China is nearer to imposing tariffs on aluminium imports. Sugar group Tate & Lyle was also on the back foot, dropping 6.75p to 453.75p.

M&S was in the top flight fallers after confirming that executive director Charles Wilson – a key lieutenant of boss Stuart Rose – was quitting to join cash-and-carry chain Booker. Shares weakened nearly 1% or 3.5p to 362.25p.

Progress by C&W in London was accompanied by gains for consumer goods group Unilever – fourth in the risers with an 3.5p advance to 555.5p – and banking giant HSBC, which was 1.5p stronger at 916p.

It helped cushion the negative reaction to speculation and announcements concerning the likes of ITV, M&S and building materials specialist Wolseley.

ITV was at the top of the fallers board after reports said a consortium involving private equity group Apax Partners was no longer interested in bidding for the broadcaster because of the size of its pension fund deficit. ITV shares dropped 4.25p to 121.5p.

Build Center owner Wolseley also took a hit – down 19p to 1174p – after saying its UK division had shown good growth but at a slower pace in recent months.

However, oil stocks reacted in mixed fashion to a revival in the cost of a barrel of crude oil in New York towards 59 US dollars. Shell was 4p lower at 537p, but BP ticked up 4.5p to 623p.

Elsewhere, shares in struggling engineering group Jarvis lost 15% of their value before recovering to end the session 5% or 0.39p off at 7p after it said it was in advanced talks to sell its road maintenance division to support services group Accord.

The day’s biggest risers were Cable & Wireless up 3.5p to 147.5p, BP lifting 4.5p to 623p, GUS gaining 5.5p to 858.5p and Unilever advancing 3.5p to 555.5p.

Biggest fallers were ITV down 4.25p to 121.5p, Kingfisher falling 5.5p to 250.25p, Hays off 2.75p to 128.25p and Wolseley losing 19p 1174p.