More positive signs from the US failed to lift London’s leading shares index today as fears over the eurozone and a credit agency warning to banks rattled investors.
The FTSE 100 Index closed 6.8 points lower at 5885.4 despite gains on US markets after the Commerce department said builders started work on 1.5% more homes in January than in December in another sign that the world’s largest economy was on the mend.
Heavily weighted banks suffered falls of up to 2% after Moody’s placed the credit ratings of 122 lenders on review, while reports of further dithering in Greece over the next phase of its €130bn bail-out fund hit sentiment.
The pound was up against the euro at 1.20, as fears over the potential fallout from a Greek default continued to weigh on the single currency. Meanwhile, sterling was also up against the US dollar at 1.57.
But some of the eurozone jitters were eased by successful French and Spanish bond auctions, showing that markets are still willing to lend to the countries.
HSBC, Royal Bank of Scotland and Barclays, who were all named in the Moody’s review, saw shares fall 2.3p to 573.6p, 0.2p to 26.8p and 3.3p to 244.9p respectively, while Lloyds dropped 0.5p to 34.4p.
BAE was among the biggest top flight losers – down 7.8p to 325.2p – after sales fell 14% to £19.2 billion in 2011 amid defence cuts in the US and UK and as it warned little improvement was likely this year.
The group, which is reported to be considering a move to close its Portsmouth dockyard, threatening up to 3,000 job losses, said underlying profits dropped 7% to £2bn.
BP was up 0.2p at 487.6p following its falls yesterday. It and other energy firms were boosted by reports that Iran is threatening to stop supplying oil to some western countries, which would hike prices further.
Primark owner Associated British Foods was among the biggest risers after an upgrade from Morgan Stanley. It predicted that the budget retail chain would successfully expand in Europe despite the financial crisis. Shares rose 10p to 1228p.
But B&Q owner Kingfisher was on the slide after it highlighted continued sales pressure within its UK and Ireland business in a fourth quarter trading update.
The group, which has 360 B&Q stores in the UK and Ireland, said like-for-like sales at the chain fell 2.5% in the 13 weeks to January 28, worse than City forecasts for a 2% decline and down from 0.9% the previous quarter.
Shares fell by 0.9p to 278p even though the company expects profits for the year to the end of January will be in line with City hopes for a 20% rise to £799 million, helped by strong sales growth at its overseas division, which includes Castorama and Brico Depot.
The biggest Footsie risers were Reed Elsevier up 15.5p at 549.5p, Sainsbury’s ahead 5.9p at 296p, Imperial Tobacco up 43p at 2492p and Wolseley ahead 33p at 2355p.
The biggest Footsie fallers were Evraz down 15.5p at 420.8p, Polymetal International off 37p at 1075p, Randgold Resources down 175p at 6980p and BAE Systems off 7.8p at 325.2p.