FTSE in the red

The London market finished the week in negative territory today as weakness for the US dollar met head on with a cautious report on the banking sector.

Currency movements were the major factor in the decline which saw the FTSE 100 Index slip by as much as 70 points during the day, although it clawed back some ground to finish down 17.9 at 6122.1.

Companies with dollar earnings were among those dragged lower, as the pound rose two cents against the greenback to 1.93 US dollars – its highest level since New Year’s Eve in 2004 – on the back of higher interest rates in the UK and concerns over the US economy.

Meanwhile, sentiment was impacted by the absence of trading in the United States yesterday, following the Thanksgiving holiday.

David Buik, of Cantor Index, said there was also an element of profit taking after a decent run for the London market.

Banks were among the biggest casualties after a review of the sector by Morgan Stanley, which highlighted concerns about bad debts in unsecured lending.

As a result, the investment bank cut its target prices for Barclays and Lloyds TSB – causing shares in the pair to fall by 7.5p to 692p and 7p to 554.5p respectively.

Others in the sector under pressure included HBOS, which dipped 9p to 1060p, while HSBC was 8p lower at 968p.

Bradford & Bingley was the only stock to escape the sell off, as it drew encouragement from the results performance of Paragon, which also operates in the buy-to-let sector. Shares finished 1.25p stronger at 461.25p.

B&Q owner Kingfisher was another heavy faller as investors braced themselves for a trading update from the retailer next week. Shares were off 6.75p to 249.75p, a drop of almost 3%.

A report suggesting consumers were tightening their belts ahead of Christmas also did little for confidence, while fresh UK economic data revealed a slowdown in household spending.

It meant a fall of 7p to 412p for Argos owner Home Retail Group and a drop of 34p to 1830p for Next.

Among those stocks affected by the dollar weakness, Build Center owner Wolseley slipped 4p to 1155p and miner Xstrata eased 13p to 2257p. Prudential was 12.5p lower at 660p, a drop of almost 2%.

However, there was support from utilities with Kelda up 17p at 933p, Severn Trent cheering 20p at 1471p, while Scottish & Southern topped the leaderboard - up 29p to 1511p.

It came after a note from Merrill Lynch suggested demand for utility firms outweighed the number up for grabs, which could mean more deals on the cards.

Elsewhere, car manual publisher Haynes fell 2.5p to 332.5p, as it said it would take a £500,000 hit from closing its operation in France.

The day’s biggest blue-chip risers were Scottish & Southern up 29p at 1511p, Kelda up 17p at 933p, British Airways up 7p at 493.75p and Slough Estates up 10.5p at 740p.

The day’s biggest blue-chip fallers were Amvescap down 20.5p at 557.5p, ICI down 14.5p at 420.5p, Kingfisher down 6.75p at 249.75p and Experian down 12.5p at 600.5p.