Poor opening on Wall Street affects FTSE

The FTSE 100 Index slid back below the 4,000 mark today as a poor opening on Wall Street depressed blue-chip stocks.

Lingering optimism after last week’s rally faded away on a mix of profit taking and concerns over the potential collapse of a deal between IBM and Sun Microsystems, sending the Dow Jones Industrial Average down more than 1% in the US.

Analysts at Morgan Stanley warned against calling an end to the bear market, which also hit sentiment on a quiet day as markets wind down towards the holiday weekend. The FTSE closed 36.1 points lower at 3993.5 after being more than 60 ahead early in the day.

“We may be in for a few days of directionless trading with investors unwilling to commit either way until Easter is over,” IG Index’s chief strategist David Jones said.

The subdued finish was a far cry from the early fillip to stocks given by Asian markets, after news that Japan is to spend around 2% of its output on stimulus measures to help workers and small businesses.

In London, miners lost out after earlier rises. Rio Tinto topped the fallers board after a broker downgrade and reports the firm had a back-up plan to sell $10bn (€7.47bn) of discounted shares should its Chinalco deal be blocked. Shares fell 282p to 2208p, or 11%.

Other miners on the back foot included Vedanta Resources and Lonmin, which fell 48p to 770p and 68p to 1417p respectively. Crude oil slid back to near 50 dollars a barrel on weaker stock markets, sending BP 4.25p lower at 453.25p.

Despite the late fall property and financial companies did better, with banking stocks higher after HSBC completed its £12.5bn (€13.7bn) rights issue with a 96.6% take-up from shareholders.

HSBC offered the new stock at 254p each, meaning investors are already sitting on a tidy profit after shares climbed another 16.25p or 3% to 450.75p today. Barclays gained 2.2p to 172.6p, while Lloyds Banking Group added 0.5p to 79.7p.

In the property sector, many players made gains after UBS brokers raised their target price on Land Securities following the completion of its own rights issue.

Land Securities rose 14.5p to 497.5p, while Hammerson was up 4.25p at 282p. British Land cheered 14p to 424p.