FTSE pulls back from early falls

Strong gains on Wall Street helped limit losses for under-pressure BP today as the wider FTSE 100 Index also pulled back from early heavy falls.

A better-than-expected rise in pending US home sales boosted investor optimism over the world’s biggest economy, helping the Dow Jones Industrial Average rise more than 1.2%.

This saw the Footsie narrow earlier losses of more than 60 points to close 12 points lower at 5151.3.

BP had spent most of the day deep in the red once more after news that US authorities had launched a criminal investigation into the Deepwater Horizon disaster, which came after it suffered a 13% plunge yesterday.

But the stock, which accounts for 7% of the FTSE 100, benefited from the late session turnaround, closing down 0.3p at 429.8p.

Sterling also remained firm, hitting 1.20 euros, while the embattled euro fought back from four year lows against the dollar, holding its ground at 1.22 dollars.

Prudential remained in the spotlight after the insurer officially called off its £24bn (€29bn) takeover pursuit of AIG’s Asian arm AIA overnight.

The move will leave the company with a £450m (€538m) bill and the prospect of losing its chief executive Tidjane Thiam after he staked his reputation on the company-transforming deal. Pru shares were 14.5p lower at 561p.

Banks joined the group on the fallers board after Lloyds Banking Group and Royal Bank of Scotland were both downgraded by JPMorgan, with RBS compounding matters by announcing 500 job cuts as part of further restructuring.

RBS slipped 1.7p to 45.1p and Lloyds fell 1.5p to 55.9p.

Among the risers more defensive stocks were in vogue as investors lost appetite for risk. Lambert & Butler firm Imperial Tobacco was a prominent gainer, with shares up 52p to 1892p.

Big pharmaceutical stocks were also doing well after a broker upgrade for GlaxoSmithKline, which cheered 23p to 1181.5p or 2%.

Peers Shire and AstraZeneca added 39p to 1446p and 38.5p to 2943p respectively.

The biggest Footsie risers were National Grid up 10.3p at 152.5p, Compass Group ahead 24p at 561p, Imperial Tobacco up 52p at 1892p and Shire up 39p at 1446p.

The biggest Footsie fallers were Royal Bank of Scotland down 1.7p at 45.1p, Legal & General off 2.2p at 79.7p, Lloyds Banking Group down 1.5p at 55.9p and Marks & Spencer down 9p at 347.7p.