FTSE closes down 5.5% for full year

A year to forget for investors ended today with London’s benchmark index 5.5% lower than its starting point in January.

With little news to drive volumes in the final session of 2011, the FTSE 100 Index drifted lower today before recovering to finish 5.5 points higher at 5572.3. That is well down on 2010’s close of 5899.9 after sentiment was rocked by double-dip recession fears and worries over Europe’s sovereign debt crisis.

However, the decline still represents a decent improvement on August, when the top flight was down by 19% at below 5000 in the wake of a credit rating downgrade for the US and spiralling debt fears in Spain and Italy.

The debt crisis has proved disastrous for the euro, which has fallen to a 15-month low against the US dollar and a 10-year record versus the yen. The pound bought 1.196 euros after a further strengthening for sterling today, while the UK currency was also up against the greenback at 1.548.

Predictably, banks were amongst the biggest stock market fallers of the year, with Royal Bank of Scotland down 49% and Lloyds Banking Group off 61%, although the pair gained in today’s shortened final session – up 0.1p at 20.2p and 0.4p at 25.9p respectively.

Other heavy fallers this year included car insurer Admiral, which fell 44% because of fears that higher-than-normal levels of personal injury claims will dent its profits growth.

Financial products business Man Group lost 58%, while miners took a battering with the likes of Vedanta Resources off by as much as 60% due to global recession worries.

However, punters holding shares at the start of the year in pharmaceuticals group Shire and fashion retailer Next were rewarded with gains of 44% and 37% respectively.

In terms of today’s trading, BG Group added 6p to 1376.5p after it signalled the start of the production phase for its Guara field in a further milestone in the development of the pre-salt Santos Basin in offshore Brazil.

Other top flight risers included Sainsbury’s, which climbed 6.9p to 302.9p, while the good week continued for ITV as its shares lifted 1.25p to 68.15p.

Aside from the supermarket sector, retailers were again on the back foot as investors awaited the usual rush of new year trading updates.

Argos and Homebase owner Home Retail Group was down 2.3p at 83.4p – taking its annual loss to 56% – and Halfords slipped 4.5p to 289p.

Meanwhile, shares in surfwear business Hot Tuna sunk another 36% to 0.075p - giving it a market value of just over £1.5m – after it reported further heavy losses and said it planned to secure a buyer to rescue the brand in the new year.

The biggest FTSE 100 Index risers were Sainsbury’s up 6.9p at 302.9p, CRH ahead 29p at 1280p, ITV up 1.25p at 68.15p and Experian ahead 16p at 875.5p.

The biggest fallers were Man Group down 2.4p at 125.7p, Old Mutual off 2.4p at 135.5p, Glencore International down 6.5p at 392p and Capita off 9p at 628.5p.