BT shares rally as recovery doubts weigh on FTSE

BT shares rallied today after it made progress in tackling its pension scheme deficit, but fears about the global recovery continued to weigh on London’s leading shares index.

The telecoms giant rose 5%, or 11.9p to 232.1p, after it reported a sharp reduction in its pension deficit to £4.1bn and pledged to eliminate the shortfall in 10 years.

But the wider FTSE 100 Index made only marginal gains, rising 9.2 points to 5854.9. It fell nearly 2% over the week after sentiment was hit by worrying data from China and the eurozone.

A report showing that US house sales declined for the second month in a row cast doubt over the recovery of the world’s biggest economy.

The Dow Jones Industrial Average, which has also been on the back foot this week, was slightly up as the London market closed, as were the Dax in Germany and the Cac-40 in France.

The pound was down at 1.20 against the euro after the single currency rebounded from recent lows. But it was up at 1.59 against a weakened dollar.

Banks came under pressure after the Bank of England’s Financial Policy Committee said they had failed to build up adequate cash buffers to help them survive another financial crisis.

It called on firms to raise external sources of funding “as early as feasible”, which would mean existing shares would most likely be diluted as they tapped investors for cash.

However, the sector largely recovered its earlier falls. Royal Bank of Scotland was down 0.1p at 28p, while HSBC was off 5.1p at 558.3p.

But Standard Chartered and Barclays reversed earlier declines to close up 2p at 1599p and 4.9p higher at 244.5p respectively.

Heavily weighted miners also pulled back their earlier losses following a poor week for the sector. Antofagasta was up 31p at 1172p and Kazakhmys rose 22.5p at 935.5p.

But Randgold Resources was among the biggest fallers in the FTSE 100 Index, following yesterday’s 13% slump, with a fall of 115p to 5650p, after a coup in Mali where the gold miner has two big facilities.

Citigroup heaped more misery on the stock when it downgraded it to neutral from buy.

Meanwhile, drinks giant Diageo saw its shares fall after it said the Government’s initiative to bring in a minimum price for alcohol to clamp down on binge drinking was misguided.

The Government is to consult on plans that retailers in England and Wales charge a minimum 40p per unit of alcohol but Diageo said it will merely penalise poorer consumers. Its shares fell 13.5p to 1510p.

Pub companies failed to gain a lift from the proposals despite expectations that they would erode the price difference between them and supermarkets.

Greene King was down 1.5p at 517p and JD Wetherspoon slipped 0.8p to 420p.

The biggest Footsie risers were BT up 11.9p at 232.1p, Ashmore ahead 11.6p at 377.1p, Antofagasta up 31p at 1172p, and Next ahead 73p at 2987p.

The biggest Footsie fallers were Burberry down 31p at 1513p, Randgold Resources off 115p at 5650p, Wolseley down 40p at 2464p, and Severn Trent off 25p at 1564p.