FTSE slips on recovery nerves

The London market followed Wall Street lower today amid more nerves over prospects for economic recovery.

The London market followed Wall Street lower today amid more nerves over prospects for economic recovery.

Friday’s sell-off in the US was matched by further pressure this afternoon on financial and materials stocks in the Dow Jones Industrial Average, which is now trading below 10,000.

The FTSE 100 Index shed 50.8 points or 1% to 5191.7 in a late tumble after treading water for much of the session.

The disappointing finish followed a brighter start to the session given by Asian markets, which found new impetus after South Korea’s central bank said economic growth accelerated to 2.9% in the third quarter – the fastest growth since the first quarter of 2002.

Despite a slow day for corporate news, traders will have more to get their teeth later this week with results from corporate heavyweights and key economic data.

“We may well see some choppier trading in the days to come, ahead of Thursday’s US GDP figures,” IG Index’s Philip Gillett said.

Oil heavyweight BP – reporting third-quarter results tomorrow – rose 2.1p to 567.1p despite crude oil prices easing below $80 a barrel due to the strength of the dollar. Royal Dutch Shell was down 0.5p to 1852p, giving up earlier gains.

Pharmaceuticals company GlaxoSmithKline is also set to release its results this week, which should show a lift from demand for its swine flu vaccine. Glaxo edged 6.5p lower to 1230p.

Shire was on the front foot for much of the day after the US Food and Drug Administration gave the company’s attention deficit drug five-year exclusivity. It eventually finished flat at 1035p.

One of the biggest falls in the top flight was posted by British Airways, which declined nearly 5% or 10.1p to 199.7p after the Financial Times indicated the airline may be forced to give up take-off and landing slots due to a proposed transatlantic alliance with American Airlines and Spain’s Iberia.

The airline was also hit with the news that thousands of cabin crew are to be balloted for industrial action in a row over new contracts.

Lloyds Banking Group was the Footsie’s biggest faller, 7% down after another weekend of speculation about its possible avoidance of the government’s asset protection scheme. Shares were down 6.89p to 89.34p after reports said the bank was on the brink of announcing a £12bn rights issue.

Royal Bank of Scotland, which may also turn to investors for support, was down 2.66p at 44.42p.

In the FTSE 250 Index, shares in consumer goods firm McBride jumped almost 10% after it reported a 7% rise in revenues amid higher demand for cheaper own-brand household and personal care products and favourable exchange rates. Shares were 19.2p higher at 219.9p.

The biggest Footsie risers were Cable & Wireless up 4.6p at 145.6p, Fresnillo ahead 14p at 826p, Bunzl up 10p at 661.5p and Hammerson up 5.4p at 428p.

The biggest Footsie fallers were Lloyds down 6.89p at 89.34p, RBS off 2.66p at 44.42p, British Airways down 10.1p at 199.7p and Carnival off 88p at 1994p.

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