FTSE stalked by interest rate fears

Fears of rising interest rates in the United States returned to haunt investors as the FTSE 100 Index drifted into the red today.

Weaker commodity prices also weighed on the markets as falls by mining stocks offset strong gains by fund manager Man Group and steel maker Corus.

It saw the Footsie lose some of the gains made in the previous session as the index of blue chip stocks sank 19 points lower to 5704.6 at lunchtime.

The losses followed the worst month for more than three years in May when billions were wiped off the value of shares in London following a lengthy bull-run stretching back to the start of the Iraq war in 2003.

Kazakhmys led the way down today with a drop of 48p to 1088p as the price of copper eased. It was followed down by fellow miners Anglo American, which was 69p lower at 2085p, BHP Billiton, which dipped 23p to 1027p, and Antofagasta, which shed 50p to 2035p.

The miners were joined at the top of the fallers board by PartyPoker firm PartyGaming, which lost 3p to 127p.

Corporate news centred on the utilities sector after results from United Utilities and South West Water owner Pennon.

United Utilities presented a “very robust” set of figures according to one analyst with a 21% rise in profits.

The stock recovered from early losses to stand a penny higher at 661.5p, while Pennon moved 23p higher to 1291p after a performance in line with expectations.

Elsewhere in the utilities sector, International Power dipped 6p to 283.75p and British Energy fell 7p to 685p. Both stocks were among the Footsie’s strongest performers yesterday.

Johnson Matthey was also on the slide – down 11p to 1338p – despite good full-year figures and a confident outlook statement from the company.

And Norwich Union owner Aviva was among finance stocks under pressure – down 15.5p to 726.5p – as investors weighed up news that the company was looking for average sales growth of at least 10% over the next five years.

In other developments, shares in steel giant Corus rose 2% after a media report in Russia said billionaire Roman Abramovich was interested in buying a stake in the former British Steel company.

Corus shares have been boosted this year by frenzied takeover speculation within the steel industry and shares today lifted 7.5p to 398.25p.

But they were still beaten to the top of the Footsie risers board following strong results from fund manager Man. Shares in the group rose 55p to 2394p.