FTSE in the red

The proposed sale of airports operator BAA to Spain caused excitement in London today but was not enough to spare the market from another session in the red.

Shares in BAA lifted more than 2% on news that it had backed a £10.3bn (€14.9bn) takeover offer from Spanish consortium Ferrovial.

On-going fears about higher interest rates in the United States led to heavy losses on Wall Street overnight and took the shine off the deal to send the FTSE 100 Index 62.1 points lower to 5700 by mid-morning.

A drop in the price of copper added to the gloom as a string of mining stocks moved to the top of the blue-chip fallers board.

Xstrata was the day’s heaviest faller as it sank 4% or 83p to 1975p, while BHP Billiton was off 39.5p to 999.5p and Anglo American drifted 75p lower to 2021p.

Oil stocks also weighed heavy on the market with Royal Dutch Shell off 22p to 1823p and BP down 6.5p to 629.5p.

And the finance sector was in retreat with insurer Friends Provident off 3p to 175.5p and rival Legal & General 1.75p weaker at 124p, while Barclays lost 7p to 611.5p.

On a positive note, BAA soared towards the top of the risers board after it backed a takeover offer from Spanish consortium Ferrovial despite strong interest from US bank Goldman Sachs.

The Ferrovial offer put a value of 950.25p on BAA shares, including a 15.25p dividend payment, and shares in the Heathrow and Gatwick owner lifted 21p to 949p today.

Elsewhere, Carphone Warehouse gained 7.5p to 339p as investors cheered the success of its “free” broadband service, which has signed up 340,000 customers since its launch, almost twice as many as expected.

Meanwhile, shares in Regent Inns, the owner of the Walkabout and Bar Risa chains, dropped 11% or 12p to 94p after it revealed talks over a bid for the group had ended and said trading conditions continued to be difficult.