FTSE holds steady

The London market held its nerve today despite a 6% slump for Tokyo’s Nikkei index in the aftermath of Japan’s devastating earthquake and tsunami.

Investors in Europe and other parts of Asia refused to hit the panic button, but there were sharp movements for individual stocks in London, including luxury goods firm Burberry and temporary power supplier Aggreko.

The FTSE 100 was down by around 0.2%, off 10.7 points at 5818.2.

Some of Japan’s leading companies suffered heavy losses amid fears about the economic impact of Friday’s disaster, including power shortages that could disrupt factory output. Car makers were badly affected with Toyota down 8%.

Oil prices continued to fall on expectations that weaker Japanese economic output will depress demand for crude. The price of Brent crude dropped to around 111 US dollars a barrel, while the price of oil futures on the New York Mercantile Exchange was below 100 US dollars a barrel.

However the price of liquefied natural gas (LNG) leapt 7.4% to 74 pence a therm - the highest since November 2008 – as fears mounted that imports to Britain would be hit as cargoes are diverted to stricken Japan following its earthquake and nuclear crisis.

This could leave gas as the “fuel of no choice” for countries in the Organisation for Economic Co-operation and Development (OECD), analysts at Societe Generale cautioned.

The spectre of higher gas prices saw shares in London alternative energy stocks jump higher, with coal-fired UK energy producer Drax soaring as much as 7% at one stage. It later stood 16.15p higher at 412.45p, a gain of 4%.

Gas exploration giant BG Group was also higher, up more than 2% or 36.75p at 1496.75p, as wholesale gas prices rose. Other risers included Aggreko, which climbed 79.5p to 1486.5p on expectations that its generators will be in demand throughout Japan.

But energy and mining engineering company Amec, which provides services to the nuclear sector, suffered a 2% drop, down 22p to 1130p.

The biggest fall in London’s top flight came from Burberry, which generates a large slice of its sales from Japan. Shares were 5% lower, off 60p to 1114p, although broker Nomura noted that the company was well placed to plug the gap following recent strong growth in Chinese markets.

Across the retail sector it was another weak session as analysts continued to fret about rising costs and fragile consumer confidence.

With the sector’s reporting season about to get into full swing, B&Q owner Kingfisher fell 1.5p to 238.5p and Next dropped 27.5p to 1872.5p.