FTSE hopes dashed

Hopes of a strong finish to the week were dashed today after the FTSE 100 Index gave back more than 100 points to close in negative territory.

The top flight index had been 82 points higher after soothing comments on inflation from the Federal Reserve chairman Ben Bernanke helped steady the frayed nerves of investors worldwide.

But the revival failed to last as the Footsie suffered a late slump to close 21.9 points lower at 5597.4. The retreat reflected a weak opening in New York after a Fed official suggested data may be underplaying inflation.

One bright spot for the London market came from Marks & Spencer as it shares rose more than 3% – up 18.5p at 573p – on the back of a positive broker note.

The shares showed signs of returning towards the highs last seen in May after Deutsche Bank set a target price of 655p and said recent falls for the stock may represent a buying opportunity.

It said it saw a £1.2bn (€1.75bn)billion sales opportunity from turning around under-performing product categories or addressing new opportunities.

Another recovering retailer also made strong progress during the session, with Morrisons up 4.75p to 199.25p.

Elsewhere, miners reflected the volatility of the market with Antofagasta 30p lower at 1896p but Kazakhmys 35p higher at 1043p.

On a quiet day for corporate news, Centrica allayed fears that recent trading difficulties at its British Gas arm had worsened when it said business had been in line with previous guidance issued in May. It added it would invest £400m (€585m) in the UK’s first new power station in almost five years.

The news buoyed shares for much of the session, until Centrica closed 1% or 2.75p lower at 269.25p.

In contrast Scottish Power rose 21.5p to 577.5p and British Energy gained 8.5p to 669.5p, ahead of full-year results on Tuesday. There was also a gain of 41p to 2117p for Carnival after second-quarter earnings from the US-based cruise ship operator bettered market expectationsAmong the fallers, Ladbrokes and Rentokil Initial were down – 13.25p and 4.5p to 372.25p and 140.25p respectively – as institutions reduced their exposure to the pair on their final day in the top flight.

Power station company Drax, which is one three stocks due to be promoted to the FTSE 100 Index on Monday, rose 26.5p to 842p.

Elsewhere, second tier oil exploration company Tullow saw its shares gain 3.25p to 323.75p following a potentially “significant” new gas discovery in the North Sea.

However, shares in project management company AMEC fell 10% or 33p to 312.5p after it warned half-year results would be at the bottom end of hopes after further tough trading in its UK construction arm.

The biggest Footsie risers were Scottish Power up 21.5p at 577.5p, Kazakhmys ahead 35p at 1043p, Marks & Spencer up 4.75p at 199.25p, Morrisons ahead 4.75p at 199.25p.

The biggest fallers were Ladbrokes down 13.25p at 372.25p, Rentokil Initial off 4.5p at 140.25p, Schroders NV down 28p at 919p and Hammerson off 30p at 1123p.