FTSE fails to make expected gains

The London market remained stuck in first gear today, despite strong gains on Wall Street last night after US interest rates were cut to near zero.

The FTSE 100 Index had been expected to open 60 points higher, but instead drifted lower before settling up 17.1 points at 4326.1 by mid-morning as sentiment took a hit from a sharp fall for market heavyweight HSBC.

The global banking giant fell almost 5%, or 34.25p to 680.75p, amid speculation it may have to raise $14bn (€9.9bn) through a share placing or rights issue. Other banks were under pressure, with HBOS off 1.9p at 70p.

While the latest cut by the US Federal Reserve left the Dow Jones Industrial Average more than 4% higher, investors in London were more wary given the message the decision sent on the state of the global economy.

Some sectors made progress, with insurers among those on the front foot. Prudential set the pace with a rise of 8% or 29p to 379p, while Friends Provident added 4p to 83.4p and Legal & General rose 2.4p to 73.2p.

In corporate news, property consultancy Savills slumped 9% or 23.75p to 226.25p after it said full-year profits will be significantly below hopes.

Savills also said it expected to make further job cuts across Europe as it looked to reduce costs.

Sports World owner Sports Direct International moved in the opposite direction, up 9% or 3.5p to 39.25p after it stuck by full-year forecasts.

National Express gained ground, up 3.25p to 461p, after it detailed “robust” trading in its bus business and said rail operations continued to grow passenger revenues, despite the uncertain economic conditions.

South West Trains owner Stagecoach fared less in its last week as a blue-chip company, falling 3% or 4p to 128.1p.