FTSE struggles for direction

Strong gains by steel maker Corus were offset by a bout of profit taking as the FTSE 100 Index struggled for direction today.

Strong gains by steel maker Corus were offset by a bout of profit taking as the FTSE 100 Index struggled for direction today.

Shares in former British Steel group Corus soared 11% to their highest level for more than five years amid reports it had held merger talks with Russian rival Evraz.

But in an otherwise dour session in London, the Footsie edged 0.4 points lower to 5991.3 as recent gains by insurers and miners were reversed.

It followed strong gains in London on Friday and Monday which saw the top flight move above the 6000 mark for the first time since March 2001.

David Jones, chief market analyst at CMC Markets, said: “The next few days will leave investors waiting to see if the 6000 level can be decisively reclaimed and whether the Footsie can once more push out to fresh multi-year highs.”

Corus did its best to buoy the market with gains of 9.5p to 94p on reports that it had discussed a tie-up with Evraz of Russia. Analysts believe Corus must take action after Mittal Steel launched a £12.9 billion hostile bid for European rival Arcelor to create a steel giant whose output would be three times as large as its closest competitor.

There were also gains for B&Q owner Kingfisher which was initially out of favour after revealing that annual profits fell by a third to £445.7m (€643.7m).

But a recovery saw it close 5p higher at 248p as traders overlooked the downbeat performance, to focus on a revaluation of its property to £3bn (€4.4bn) which it is thought could spark interest from private equity firms.

The online gaming sector was on the front foot after reports said that PartyGaming was set to unveil Mitch Garber as chief executive. The PartyPoker operator gained 2% or 2.75p to 128.25p, while smaller mid-cap rival 888 Holdings leapt 8% or 15.5p to 207p.

But the gains were not enough to inspire the rest of the market as the mining sector plunged into the red after a host of heavyweights went ex-dividend - meaning new investors are no longer entitled to the latest payout.

BHP Billiton was down 14.5p to 962p and Rio Tinto was off 29p to 2711p, while softer metal prices contributed to falls for Xstrata – down 38p to 1762p – and Antofagasta – 14p lower at 2043p.

Insurers were also in reverse after strong gains yesterday following Prudential’s rejection of an offer from Norwich Union owner Aviva. The Pru was down 2p today to 741.5p, while Aviva lost 18.5p to 830p.

And housebuilder Persimmon was caught in profit taking after strong gains yesterday as it fell 21p to 1390p, although building materials supplier Wolseley recovered to finish flat after concerns over the strength of the US housing market dogged it early on.

The day’s biggest blue chip risers were Corus up 9.5p to 94p, Cable & Wireless up 6.75p to 112.75p, British Airways 8p higher at 362.5p, and PartyGaming with gains of 2.75p to 128.25p.

The heaviest fallers were British Energy Group down 16.5p to 632.5p, Aviva off 18.5p to 830p, Xstrata 38p lower at 1762p, and Marks & Spencer down 10p to 560p.

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