FTSE deep in the red

The London market was deep in the red today as investors fretted over economic prospects on both sides of the Atlantic.

US policymakers held interest rates held at 2% yesterday, but it is feared the Federal Reserve’s focus may shift to mounting inflation with a resulting rate rise in the coming months.

And comments from Bank of England Governor Mervyn King today over the UK’s deepening economic slowdown and inflation concerns compounded the sell-off in London, with the FTSE 100 Index down 78.6 points to 5587.5 by mid-morning.

Banks and retailers, many of whom enjoyed gains yesterday, were among the session’s losers.

Barclays lost all the ground it made up yesterday after confirming plans to raise £4.5bn (€5.7bn) of new capital from wealthy overseas investors. Shares were down 20.25p to 310.75p.

Lloyds TSB was another loser, down 15.75p to 312.75p, with Royal Bank of Scotland down 5p to 224p.

Halifax Bank of Scotland, whose shareholders will vote on the group’s £4bn (€5bn) rights issue later today, was also on the back foot, down 5.5p to 286.25p.

Second-tier bank Bradford & Bingley rose 2%, up 2.25p at 77.75p after last night’s news that it had refused the Resolution team access to its books as the group is proposing an alternative fundraising plan for the bank.

The morning gloom saw blue chip fashion chain Next slide 36.5p to 990.5p, with Carphone Warehouse down 5.75p to 199p.

Pay-TV firm British Sky Broadcasting was also on the back foot following a broker downgrade citing risks to advertising income amid a deteriorating economy. ITV was off too, falling 1.8p to 50.6p.

With oil prices showing no sign of falling back from the 135 US dollar a barrel mark, British Airways was down 13.25p at 215.75p. Cruise ship operator was also in reverse, falling 75p to 1693p.

Just a handful of Footsie firms were in positive territory, led by mining giant Anglo American as it reversed losses seen yesterday, gaining 50p to 3335p.

Oil giants BP and Shell were also on firmer ground amid the steady commodity prices. The giants were up 2.75p to 576.5p and 7p to 1991p respectively.