The Bank of England’s widely anticipated cut in interest rates failed to breathe life into the FTSE 100 Index today as it came under further pressure.
The Bank’s decision to cut interest rates to an all-time low of 1.5% from 2% was offset by gloomy sentiment across the Atlantic as Wall Street was shaken by grim unemployment news and poor retail performance.
But the Footsie was able to claw back from near-2% losses to close down 2.1 points to 4,505.4.
Poor sales figures from US giant Wal-Mart sent the Dow Jones Industrial Average down more than 80 points in early trading, as they signalled that even the strong retailers struggled during the holiday shopping season.
Official US figures also showed the number of people continuing to seek unemployment benefits jumped unexpectedly by over 100,000 to 4.6 million in more bad news for the US economy.
Analysts believe rising unemployment is adding to consumer anxiety and further reducing their spending, which drives about 70% of the US economy.
Miners were under pressure in London after a fall in commodity prices, with Vedanta Resources down 45p at 705p, or 6%, Anglo American was also off 102p at 1623p and Rio Tinto 82p cheaper at 1730p.
Banks enjoyed a rare strong session as the Bank of England’s cut in base rate bolstered shares.
Barclays added 7.2p to 177p, while Lloyds TSB was up 4.5p at 128.4p and merger partner HBOS lifted 1.3p to 74p. Royal Bank of Scotland rose 1.6p to 50.6p after it said it was reviewing its stake in Bank of China.
Retailers continued to defy analysts with better-than-expected results, but the picture remained mixed for the sector.
Sainsbury’s delivered a best-ever Christmas with more than 22 million customers, although investors took profits after recent gains, leaving shares 6p lower at 328.75p.
Morrisons dipped on it rival’s strong performance, falling 4p to 277.75p. Marks & Spencer saw shares drop 9.5p to 234.5p, while Tesco stocks rose 0.8p to 361.1p.
Oil heavyweights meanwhile came under pressure after a sharp collapse in crude oil prices to around 45 US dollars a barrel on higher than expected US inventories data, but rebounded towards the close with BP reversing its slide to end up 8.25p at 532p.
Elsewhere, a raft of other corporate updates gave investors plenty to chew on. FTSE 250 housebuilder Persimmon cut its final dividend, but added 13.25p to 293p today as it reported no further deterioration in results and a better than expected debt position.
And designer brand Ted Baker was unchanged at 324p despite lowering profits guidance after feeling the heat from a cut-throat Christmas for fashion retailers.
The biggest Footsie risers were Admiral Group up 85p at 1000p, Autonomy Corp ahead 71p at 1052p, Tullow Oil up 37.5p at 747.5p and International Power up 12.25p at 280.25p.
The biggest fallers were Prudential down 31.5p at 388.25p, Standard Chartered down 60p at 860p, Vedanta Resources off 45p at 705p and Cairn Energy down 98p at 1902p.