Falling oil prices drag Footsie down

Energy stocks led the FTSE 100 Index into the red today as hopes of another buoyant session in London were shattered by falling oil prices.

Early gains of 31.1 points turned into losses of 46.4 points this afternoon as the top flight crashed back below the 5500 barrier to close at 5477.4.

The heaviest faller of the day was oil heavyweight BP as the price of oil eased more than 2% to 57 US dollars. Shares in BP fell 16.5p to 644.5p, while rivals Cairn Energy and Royal Dutch Shell slipped 43p to 1855p and 24p to 1903p respectively.

They were followed down by fellow energy stocks BG Group, which was off 10p to 548.5p and British Gas provider Centrica, down 5p to 232.5p.

The UK’s most heavily traded stock Vodafone was also in negative territory after broker Lehman Brothers removed the company from its list of recommended telecoms stocks. Shares in the mobile phone giant fell 2p to 126p.

Investors banked profits in sugar group Tate & Lyle after massive gains on Friday on the back of relief over the impact of sugar reforms. Shares in Tate fell nearly 2% or 10p to 557p today.

Further Footsie losses were halted on a positive day for insurers, which saw Legal & General among the session’s top risers. It added 2p to 116.25p, while Friend Provident improved by the same amount close at 193.75p.

In the banking sector, Northern Rock was ahead 6p at 842.5p, but there was less positive news for HSBC, whose shares fell 1p to 940p with news that it had found a replacement for chairman Sir John Bond from within its ranks.

Barclays and Royal Bank of Scotland were also down, 1.5p to 602p and 23p to 1674p respectively.

There was little in the way of other corporate news in the top flight so Homeserve and Blavod Extreme Spirits were among smaller firms taking the results spotlight today.

Homeserve, which specialises in emergency repair services, proved the main success story of the session, with its shares at the top of the FTSE 250 Index risers board after a gain of 13% or 129p to 1160p.

The improvement reflected an 18% rise in half-year profits to £10.8 million - in line with expectations – while the company sounded an upbeat note on the second half, which is traditionally its busiest.

Blavod fared less well, even though operating losses reduced to £1.6 million and turnover increased by 140% to £2.2 million. Shares lost some of their recent sparkle to stand 8% or 3p lower at 33p.

Investors also latched on to weekend media reports that private equity firms may be circling radio group GCap Media following its shock change in strategy last week.

Shares in GCap have fallen heavily for the past two sessions, but were ahead by 3% or 7.5p to 275.5p today.

The day’s biggest blue-chip risers were AMVESCAP up 8.25p to 397.25p, Legal & General up 2p at 116.25p, Smith & Nephew ahead 7p to 515p and Friend Provident up 2p to 193.75p.

The heaviest fallers were BP off 16.5p at 644.5p, Cairn Energy down 43p to 1855p, Anglo American down 42p to 1837p and Centrica down 5p to 232.5p.