FTSE closes lower

The London market reversed earlier gains to closed lower today as worries over surging oil prices and the economic crisis in Greece rattled investors.

The FTSE 100 Index was down 16.6 points at 5973.8 as fears over the potential for civil war in Libya saw Brent crude hit $118 before edging back to $116.

Elsewhere, the eurozone debt crisis was drawn back into the spotlight following the decision of ratings agency Moody’s to downgrade Greece’s debt to even further below junk status.

The Greek government immediately hit back and said the rating was “completely unjustified” and did not reflect an “objective and balanced” assessment of the conditions Greece is presently facing.

But the move hit banking shares with Lloyds Banking Group down 1.1p at 61p, Barclays off 5.2p at 307.95p and Royal Bank of Scotland dropping 0.3p at 43.8p.

The pound lost further ground ahead of this week’s Bank of England rate-setting meeting, when interest rates are expected to be held. Sterling was down against the US dollar at 1.61 and the euro at 1.15.

Some support was given by the emergence of a number of major takeover deals, led by fashion conglomerate LVMH’s plans to buy Italian jeweller Bulgari for $6bn (€4.3bn), which saw potential target Burberry move ahead 4% or 42p at 1200p.

Hard drive maker Western Digital also plans to buy Hitachi Global Storage Technologies, while Rolls-Royce and Daimler disclosed they are in talks with German engines giant Tognum about a potential £2.5 billion deal.

Blue-chip testing firm Intertek was the biggest Footsie gainer, up 5% or 95p to 1994p, after it accompanied an 11% hike in annual profits to £211.9m with the £450m acquisition of Moody International.

The deal for the firm, which employs 2,500 people, will boost Intertek’s presence in the energy sector.

But news of slowing growth at satellite operator Inmarsat sent it to the top of the fallers board, down 13% or 91.5p to 593p.

While it posted sharply higher profits for 2010, Inmarsat said revenues growth slowed in the final quarter of 2010 and early part of this year, particularly in the maritime sector.

Second-tier player Forth Ports was also in the spotlight after the Tilbury docks and Grangemouth container port owner revealed a new takeover approach from infrastructure fund Arcus valuing the group at around £750 million.

The latest proposal is worth 1630p a share and is higher than the 1400p – or £640m – rejected by Forth from a consortium featuring Arcus in April. Forth’s shares, which have jumped in recent days on market speculation of a new bid, were 5% or 82p higher at 1605p.

The biggest Footsie risers were Intertek up 95p at 1994p, Burberry ahead 42p at 1200p, Investec up 9.9p at 474.5p and International Power ahead 6.1p at 324.8p.

The biggest Footsie risers were Inmarsat down 91.5p at 593p, Vedanta Resources off 87p at 2365p, Serco down 19p at 599.5p and Rio Tinto off 104p at 4210p.