FTSE five points down at close

London’s leading shares index struggled to make progress today after weaker-than-expected retail sales in the US overshadowed an upbeat bond auction in debt-laden Italy.

The FTSE 100 Index closed 5 points lower at 5899.8 after total retail sales in the world’s biggest economy grew 0.4% last month, compared with forecasts of a 0.7% rise.

The dip back below the 5900 came despite the market’s resilience to news that Moody’s downgraded the ratings of countries including Italy, Spain and Portugal, while the UK and France saw their AAA ratings threatened after being put on negative outlook.

A successful bond auction in Italy and an improved investor sentiment survey in Germany gave some support, but markets in Germany and France also closed lower.

Chris Beauchamp, market analyst at IG Index, said: “It is looking as if all the wooing in the world will not succeed in pushing the FTSE higher from here, and growing skittishness regarding the rally suggests that a major turn in sentiment might well be on its way.”

Traders were also driven by the hope that Greece will receive agreement in principle that it can have the next tranche of its bailout funds at tomorrow’s meeting of euro finance ministers in Brussels.

The Greek parliament approved more austerity measures over the weekend which are expected to pave the way for the next instalment of the funds.

And a fall in the consumer prices index measure of inflation to 3.6% in January, from 4.2% in December, supported hope that the Bank of England had scope for yet more money printing under its quantitative easing scheme.

The increased likelihood of further QE weakened the pound, which fell to 1.56 against the US dollar and 1.19 against the euro.

Miners lost ground after their big gains yesterday, with Rio Tinto off 118p at 3727.5p and Xstrata down 29p at 1184p.

Banks were also among the biggest fallers, with Royal Bank of Scotland sinking to the bottom of the FTSE 100 with a 1.5p fall to 26.7p, while Lloyds Banking Group moved 1p lower at 34.3p.

Outside the top flight, shares in beleaguered retailer Carpetright jumped 4.5% or 26p to 604p amid market speculation that chairman and chief executive Lord Harris is planning to take the business private.

Cable & Wireless Worldwide topped the second-tier fallers board after surging 46% yesterday on the back of Vodafone’s admission that it is mulling a takeover offer for the corporate telecoms firm. Shares were down 6%, or 1.9p at 26.7p.

And directories firm Yell slid 18% – 1.1p to 4.8p – after it reported a bigger than expected 15% slump in revenues for the quarter to December 31, including a 22% decline in printed directories.

The biggest Footsie risers were Bunzl up 32.5p at 910.5p, BAE Systems ahead 9.4p at 329.4p, Burberry up 30p at 1423p and Capita ahead 13.5p at 648p.

The biggest Footsie fallers were Royal Bank of Scotland down 1.5p at 26.7p, Rio Tinto off 118p at 3727.5p, Lloyds Banking Group down 1p at 34.3p and Vedanta Resources off 31p at 1251p.