Unemployment numbers drag FTSE down

The FTSE 100 Index lost ground today as more economic gloom dominated sentiment.

The FTSE 100 Index lost ground today as more economic gloom dominated sentiment.

UK unemployment topped two million for the first time in more than a decade, while banks were also in the spotlight after the Financial Services Authority (FSA) pledged a tough new regulatory regime.

With US markets also on edge ahead of the latest announcement on policy measures from the Federal Reserve this evening, the Footsie closed 52.1 points lower at 3805 - giving up an initial 40-point gain.

Lower crude oil prices also weighed on markets after figures from the US showed bigger than expected stocks of oil and petrol.

Among the banks, HSBC was a prominent faller - down 5%, or 23.25p to 436.75p - with shares under pressure ahead of a shareholder meeting to approve its proposed £12.5bn (€13.25bn) rights issue.

Banks were in sharp focus as the FSA outlined aims for an overhaul of City regulation, warning of "intensive supervision" and strict rules on pay and lending practices.

But Barclays and Royal Bank of Scotland made strong advances in London, helped by comments from RBS chairman Philip Hampton, as he told the Financial Times he saw some positive signs in recent trading.

Shares in the NatWest owner rose 0.9p to 23.1p, a gain of 4.5%, while Barclays was the leading Footsie riser - adding 4.7p to 96p.

Among other financial stocks, insurers were seeing mixed fortunes, with Legal & General adding 1.5p to 31.2p, although Prudential was down 12.75p to 251.75p ahead of its annual results tomorrow.

The leading blue-chip faller was miner Rio Tinto as fears grew that Australian regulators might reject its funding deal with Chinese aluminium firm Chinalco. Rio shed 134p to 1848p.

Elsewhere in the sector gold miner Randgold Resources came under pressure as prices of the precious metal fell, sending it down 170p to 3000p.

There were also losses for fashion retailer French Connection, which posted annual losses of £17.4m (€18.5m) and said it was not possible to predict when trading conditions might improve. Shares fell 6.5p to 49.75p, or 12%.

Blacks Leisure was under pressure even though it said the performance of newly-refurbished stores continued to offer encouragement. Shares opened lower but later recovered ground to stand unchanged at 39.5p.

Insulation group SIG meanwhile shed 4p to 101p after it confirmed plans to issue new shares in a £325m (€344.75m) fundraising exercise.

Venture Production moved in the opposite direction after British Gas owner Centrica acquired shares in the UK-based oil and gas exploration business and said it was considering whether to buy more of the company.

Shares roared 154p higher to 734p, making it the leading riser in the FTSE 250.

The biggest Footsie risers were Barclays up 4.7p at 96p, Legal & General ahead 1.5p at 31.2p, Hammerson up 12.25p at 256.25p and RBS up 0.9p at 23.1p.

The biggest fallers were Rio Tinto down 134p at 1848p, Friends Provident off 4.4p at 61.8p, Randgold Resources down 170p at 3000p and HSBC off 23.25p at 436.75p.

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