FTSE on the back foot

A strong start to the week for global markets showed signs of petering out today as attention switched to economic recovery prospects.

The FTSE 100 Index, which closed 50 points higher yesterday on hopes of a second EU bailout for Greece, retreated 11.8 points to 5798.2 amid sluggish growth in Chinese manufacturing and the prospect of more weak US economic indicators later in the session.

UK manufacturers added to the worries after the latest Markit/CIPS Purchasing Managers’ Index – where a reading of more than 50 indicates growth in overall activity – fell to 52.1 in May, from a downwardly revised 54.4 in April.

The top flight was also impacted by a number of companies going ex-dividend, meaning they are trading without the right to the latest shareholder payout.

Those fallers included Vodafone, which dropped 5p to 163.9p, while Marks & Spencer was down 9.1p to 389.8p, a decline of 2%.

On a brighter note, sentiment towards fashion label Burberry remained strong in the wake of its recent full-year results, which showed a 39% increase in underlying pre-tax profits to £298m. Shares were 20p higher at 1339p.

Other risers included security services group G4S after a broker upgrade lifted shares 5.2p to 291.1p.

And miners were lifted by the positive impact of a weak US dollar on commodity prices, as investors prepared for more disappointing figures from the American manufacturing sector.

Risers included Rio Tinto, which lifted 61.75p to 4306.75p, while Lonmin added 11p to 1611p and BHP Billiton cheered 20.5p to 2423.5p.

In corporate news, Bathstore owner Wolseley and floor coverings firm Topps Tiles were both under pressure amid tough trading conditions in the UK.

Updates from the pair highlighted the ongoing squeeze on spending levels among consumers, leading to disappointing sales figures in both cases.

Wolseley shares were initially more than 1% lower but recovered to stand 2p cheaper at 2056p, after UK profits fell by 10% to £28m in the three months to April 30. However, this was offset by stronger-than-expected trading in the United States.

Topps Tiles was 5% lower in the FTSE 250 Index, declining 3.13p to 64.4p, after it said like-for-like sales decreased 2.1% in the last seven weeks, compared with an increase of 1.8% over the six months to April 2.

While Topps said its performance was “not significantly” different from expectations, analysts pencilled in lower full-year forecasts as a result of the guidance, which came as the company posted interim profits of £7.2m.