Libya’s ongoing crisis sent the London market into the red today as oil prices continued to surge.
But the FTSE 100 Index fought back from the worst of its earlier declines, closing down 18 points at 5996.8 as fears over a civil war in the North African country played on investors’ minds.
The Dow Jones Industrial Average was down 0.9% and the Nasdaq Composite Index fell more than 1.7% as Wall Street reopened after yesterday’s public holiday and as US investors caught up on events in North Africa
European markets were also hit by a poor session in Asia amid the Libyan turmoil and on rating agency Moody’s decision to downgrade the outlook on Japan’s credit rating for the first time in nearly nine years.
Oil prices remained near two-and-a-half-year highs as fears continued to mount over world oil supplies on concerns that Libya’s crude exports of 1 million barrels a day could be affected as foreign oil companies evacuate staff from the country.
Brent crude for April delivery hit more than 108 US dollars a barrel at one stage.
The rising oil price gave support to the US dollar which was up at 1.61 against the pound. Sterling was also down to 1.18 euros following speculation that the ECB would raise interest rates sooner than previously anticipated.
Better-than-expected UK borrowing figures offered limited support to stocks, despite a £3.7bn (€4.36bn) surplus for Britain’s public finances in January thanks to a bumper tax haul.
Airline and travel stocks were particularly hard hit on fuel cost worries, with the merged British Airways and Iberia group International Consolidated Airlines down 1.3p to 238.2p.
Tour operators were also under pressure, with Thomson parent TUI Travel down 2.5p to 243.3p and second tier counterpart Thomas Cook falling 3.6p to 194.4p.
Oil giant BP benefited from surging oil prices and confirmation of its second deal in as many days as it revealed plans to sell several assets in the UK. Shares edged ahead 1.2p to 492.8p.
Property firms lost earlier gains sparked by Hammerson’s news yesterday of an 11% rise in underlying 2010 profits to £144.5m (€170.5m). Brent Cross owner Hammerson dipped 3.9p at 451.3p, while Land Securities lost 0.5p to 735p.
Engineering firm BAE Systems was the top Footsie faller after a report published by the House of Commons Committee of Public Accounts suggested defence equipment projects are over-spending, leading to speculation that the Government may need to renegotiate contracts. Shares in BAE were down 4% or 14.7p to 326.8p.
Outside the top flight, Ocado’s shares dropped 6% after upmarket grocer and online rival Waitrose’s announcement it will relaunch its home delivery business with a £10m (€11.8m) investment.
The biggest Footsie risers were Royal Bank of Scotland up 1.1p at 47.7p, Schroders ahead 25p at 1384p, BHP Billiton up 38.5p at 2413p, and African Barrick Gold ahead 8.5p at 575.5p.
The biggest Footsie fallers were BAE Systems down 14.7p at 326.8p, International Power off 10.2p at 331.7p, Bunzl down 10.2p at 331.7p, and Randgold Resources off 120p at 5115p.