FTSE rally thwarted by US activity figures

Further worrying signs from the United States economy rattled investors on both sides of the Atlantic today.

The FTSE 100 index was in positive territory for much of the session, but closed 35.6 points lower at 6048.8 after a barometer of business activity in the US came in weaker than expected.

This kept the US dollar at a 14-year low against the pound and left the Dow Jones Industrial Average 50 points lighter at the time of London’s close.

In London, miners prevented an even greater fall as support for the sector saw Lonmin rise 75p to 3070p and Antofagasta gain 10.5p to 479.75p.

The house-building sector also experienced positive sentiment after Nationwide house-price figures highlighted continued strength in the market.

Persimmon cheered 40p to 1460p while property website Rightmove topped the FTSE 250 index risers board after also benefiting from positive broker notes. Shares were up nearly 8%, or 26.25p, to 370p.

Among other second-tier house-builders, Bellway rose 38p to 1459p, Taylor Woodrow gained 9.5p to 390.5p and George Wimpey added 17.5p to 553p.

Meanwhile, Kingfisher shares bore the brunt of another gloomy quarter of trading at its B&Q retail business.

Shares were down 2%, or 5.25p, to 243p, after B&Q’s trading profits slipped and the company warned of continued tough trading conditions, coupled with the cost of refurbishing stores in the current quarter.

BAE Systems remained under pressure because of ongoing worries about the future of its Eurofighter contract with the Saudi government. While shares fell 10.75p to 387p, another defence firm, Smiths Group, rose 8.5p to 908.5p.

Hanson shares were also 3.5p higher at 729p as takeover speculation continued to drive the building products specialist.

Elsewhere, Northern Rock lost 17p to 1135p after UBS and Credit Suisse downgraded their ratings on the stock.

The rest of the banking sector was unaffected by the revision, although HSBC did ease 11p to 938p on dollar weakness. Bradford & Bingley moved in the opposite direction, up 5p to 464.25p, as traders continued to take a punt on the possibility of it receiving a takeover offer.

Pharmaceuticals giants AstraZeneca and GlaxoSmithKline were in retreat amid ongoing worries about the impact of the weak dollar on earnings. Astra eased 58p to 2950p, while Glaxo was off 20p to 1351p.

British Airways was lower, even though analysts said there would be no long-term impact from the discovery of radiation on two of its aircraft during the investigation into the death of former Russian spy Alexander Litvinenko. Shares were up for much of the session but closed down 2.5p at 492.75p.

The biggest Footsie risers were Persimmon up 40p at 1460p, BT Group ahead 7p at 284.25p, Lonmin up 75p at 3070p and Antofagasta ahead 10.5p at 479.75p.

The biggest fallers were BAE Systems down 10.75p at 387p, Kingfisher off 5.25p at 243p, Shire down 22p at 1019p and National Grid off 14.5p at 687.5p.