The FTSE 100 Index’s six-day winning streak came to an end today as investors took profits after recent gains.
Wall Street yesterday enjoyed its best election day session since 1984, but the Dow Jones Industrial Average fell nearly 2% in early trading.
European markets – where Obama’s success was priced in earlier this week – also declined. In London, the Footsie slipped more than 2% or 108.8 points to 4530.7.
The scale of the task ahead for the president-elect also dimmed the feel-good factor following the latest round of poor economic data on both sides of the Atlantic.
In the UK, the fastest contraction of the country’s powerhouse service sector in 12 years reinforced expectations that the Bank of England will announce an aggressive cut in interest rates of as much as 1% tomorrow.
Leading the fallers were mining stocks, as Morgan Stanley slashed targets on a raft of firms due to concerns over weak metals demand.
Eurasian Natural Resources was the leading blue-chip casualty, down 49p to 359p, or 12%.
It was closely followed by stablemate Kazakhmys, which shed 43p to 354.25p, while Vedanta Resources was 91.5p lighter at 908p.
Heading in the opposite direction was transport firm FirstGroup after half-year profits jumped 44% to £107.1 million, marginally ahead of City expectations.
Shares were up 14.5p to 459.75p, while the soothing of investor fears about the impact of the recession on the public transport sector caused South West Trains rival Stagecoach to improve 9.7p to 193.9p.
In the retail sector, Next shares recovered from a weak start to stand almost 6% or 64p higher at 1189p. Analysts said a third quarter retail sales drop of 4.4% was much better than expected, although this was accompanied by a warning that Next expected another drop in sales in 2009.
Marks & Spencer, which rose sharply after results yesterday, was up by another 6.25p to 244.75p – or 3% – as the hopes for a sharp cut in interest rates tomorrow offset concerns about the company’s performance in comparison to Next and Primark.
But Primark owner Associated British Foods, which also posted impressive figures yesterday, failed to find favour with investors as shares lost 1.5p to 696.5p.
The leading Footsie riser was Royal Bank of Scotland, which was up nearly 6% or 3.8p at 69p as the firm announced plans for a bond issue, which will be guaranteed by the Government.
Outside the top flight, shares in building firm Rok tumbled after it said projects worth more than £150 million had been shelved or cancelled by public and private clients following the banking crisis.
It expects profits to be £12 million lower than expected. The stock finished a torrid session down by more than half, or 38.5p to 35.25p.
The biggest Footsie risers were RBS up 3.8p at 69p, Next ahead 64p at 1189p, Barclays up 10p at 195.9p and Stagecoach ahead 9.7p at 193.9p.
The biggest fallers were ENR down 49p at 359p, Kazakhmys off 43p at 354.25p, Wood Group down 29p at 253p and Vedanta Resources off 91.5p at 908p.