FTSE in doldrums
The London market ended the week in the doldrums today as economic woes continued to haunt the eurozone.
A shock report showing growth of just 0.1% in the 16-nations group during the last three months of 2009 put the brakes on the top flight’s four-day winning run.
The FTSE 100 Index ended the day down 19 points at 5142.5, while New York’s Dow Jones Industrial Average dropped 1%.
Wall Street’s decline came despite a report showing US retail sales grew more than expected in January.
Stocks fell after China said for the second time in a month it would force banks to increase their reserve levels, effectively tightening monetary policy, while the mood soured further after a disappointing report on US consumer sentiment.
The euro continued to be under pressure as fears over the eurozone economies persisted.
The pound rose to €1.14 but fell against the US currency, with £1 worth around $1.56.
Miners were off the menu following the China decision, as investors fear any slowdown in growth would hurt demand for raw materials.
This left Vedanta Resources 61p lower at 2363p, Xstrata down 25.5p at 1005p and Anglo American off 37.5p to 2310p.
The flight from risk also put banks under pressure as Lloyds Banking Group fell 1.56p to 46.59p, Barclays dropped 6.35p to 262p and Standard Chartered eased 22p to 1413.5p. Barclays is due to post annual results on Tuesday.
Royal Dutch Shell also fell 22p to 1663.5p after oil prices dipped below $74 a barrel as the US dollar strengthened. BP bucked the trend with a modest fall of 0.9p to 573.7p.
There was a further blow to confidence after fast-fashion chain New Look abandoned plans for a stock market listing that would have raised £650m.
In the retail sector, Next fell 3p to 1917p and Marks & Spencer dropped 4.1p to 327.9p.
Investors sought refuge in safer sectors, with rises for National Grid – up 16p to 640p – household products group Reckitt Benckiser lifted 43p to 3313p and Severn Trent added 9p to 1132p.
Two companies under pressure after results presentations were back on the front foot after heavy losses yesterday.
Telecoms group BT returned to positive territory – up 2.6p to 122.5p – after dropping 9% on Thursday due to the Pension Regulator’s “substantial concerns” about how the company plans to tackle its £9bn pension deficit.
As well as BT, Diageo got a shot-in-the-arm after results yesterday showed a fall in half-year profits.
Shares recovered 12p to 1030p, as Royal Bank of Scotland maintained a buy rating on the stock and said the Guinness-to-Smirnoff firm should benefit when consumer confidence starts to return.
British Airways – another firm with a large pension fund shortfall – fell 8.4p to 195.5p.
The biggest Footsie risers were National Grid up 16p at 640p, BT up 2.6p at 122.5p, United Utilities up 9p at 538p and TUI Travel up 4.4p at 264p.
The biggest Footsie fallers were British Airways down 8.4p at 195.5p, Lloyds Banking Group down 1.56p at 46.59p, Rolls-Royce off 14p at 506.5p and Legal & General down 1.9p at 69.8p.
