The FTSE 100 Index was forced onto the back foot today after stocks were dealt a late blow by poor economic news from the US.
The London market trod water for much of the day but turned lower as jobs, manufacturing and construction figures painted a gloomy picture of the world’s largest economy and sent Wall Street to early losses.
Oil prices rising to above 126 US dollars after a spike in gas futures also unsettled traders as the Footsie closed 57.2 points lower at 5354.7, a fall of 1%.
In London, the biggest story of the day was the surprise failure of British Energy and France’s EDF to complete £12bn (€15.2bn) takeover talks, causing shares in the UK firm to slide.
British Energy stood 4% or 29.5p lower at 700p in the absence of a 765p a share bid from French suitor EDF.
British Gas firm Centrica accompanied British Energy lower as the firm had been expected to participate in the takeover. Shares stood 17.75p lower at 297p, making it the top flight’s worst performer.
Heavy falls for miners after falling metal prices also weighed on the Footsie as the sector accounted for seven of the Footsie’s top eight fallers. The biggest decline came from Rio Tinto, off 293p to 5047p.
But the banking sector enjoyed a rare positive session as investors covered their positions ahead of heavyweight results from Barclays, HSBC and Royal Bank of Scotland next week.
Half-year figures so far may not have done much to restore shattered confidence, but investors were comforted that Alliance & Leicester at least delivered a performance in line with expectations today.
The group, which has agreed a £1.26bn (€1.6bn) sale to Spain’s Santander, reported a 99% plunge in first half profits to just £2m (€2.5m), but shares held steady with a gain of 0.25p to 340.75p.
HBOS continued to rise after yesterday’s sharp profits fall came in ahead of the City’s worst expectations, forcing shares up another 4%, or 11.75p, to 302.25p. Lloyds TSB, which suffered a backlash after its interims disappointed on Wednesday, recovered from a weak opening to stand 4.75p higher at 300p.
Royal Bank of Scotland was up 3.5p at 215.25p and Barclays cheered 3.5p to 341.5p.
Attention was also focused on British Airways after the company reported a sharp fall in first quarter profits and reduced its annual revenues target to 3%. Shares opened 6% lower, but investors later eyed value in the battered stock, which closed 3.75p better at 259p.
B&Q firm Kingfisher meanwhile was the Footsie’s standout performer, up 5%, or 5.8p to 124.2p, after it reduced its debt burden by announcing the €560m sale of its Italian business Castorama.
The biggest Footsie risers were Kingfisher up 5.8p at 124.2p, Shire ahead 36p at 867.5p, Friends Provident up 2p at 86.4p and BAE Systems ahead 10p at 460p.
The biggest fallers were Centrica down 17.75p at 297p, Rio Tinto off 293p at 5047p, Xstrata down 200p at 3446p and Antofagasta off 31p at 547.5p.