FTSE struggles on debt concerns

Fresh worries about the eurozone debt crisis and the UK economy meant London’s blue chip shares index struggled to make significant gains today.

The UK’s manufacturing sector failed to return to growth in the first two months of 2012, while France, Spain and Italy saw their borrowing costs rise as nervousness about the strength of the eurozone economy gripped investors.

But the FTSE 100 Index closed up 19.9 points at 5723.7 ahead of the Easter break, as the grim sentiment in Europe was neutralised by more encouraging news from the US where unemployment claims hit a four-year low.

London’s leading shares index had been down by as much as 40 points in early trading but a miners’ rally helped drag it back into the black.

It had fallen 2% yesterday after America’s central bank appeared to back away from providing additional emergency support to the world’s biggest economy, and concern grew about Spain’s prospects.

The Dow Jones Industrial Average also regained its earlier losses and was flat as the London market closed.

The pound was down against the dollar at 1.58 after sterling was hit by the surprise fall in manufacturing output. But it was up against the euro at 1.21, with poor German industrial production data adding to the single currency’s woes.

Banking shares were among the biggest fallers amid a Europe-wide sell-off of lenders.

Lloyds was down 0.5p at 31.4p, Royal Bank of Scotland was off 0.3p at 25.8p and HSBC was 2.3p lower at 554.5p.

But heavily weighted miners were on the front foot after yesterday’s sell-off, with Glencore the biggest riser, up 22.4p at 411.8p.

In corporate news, Halfords dropped 2% as analysts cut their current year profit forecasts in the wake of a fourth quarter trading update.

Highlighting cost pressures and difficult sales conditions, Numis Securities was among those to express caution by cutting its forecast for profits in the year to next March to £78.4m. Shares were 7p lower at 308.4p.

However, there was optimism surrounding JJB Sports after the chain secured £30m of additional funding, including from US retailer Dick’s Sporting Goods.

The investment, which could lead to Dick’s owning more than 60% of JJB, will help with the Wigan-based firm’s turnaround and store refit plans. Shares lifted 5% or 0.8p to 17p in the wake of the investment, although they had been up more than 10% earlier.

And the UK’s biggest cash-and-carry wholesaler Booker saw its shares fall 4% - ending a recent strong run – even though the group said it was on track to hit City full-year profit expectations.

Sales grew 4.8% in the 12 weeks to March 23 but this was slower than the 6.5% growth in the previous quarter despite a boost from March’s heatwave. Shares were down 3.4p at 81.3p.

The biggest Footsie risers were Glencore up 22.4p at 411.8p, Ashmore Group ahead 18.9p at 385.6p, Polymetal International up 37p at 932p, and Xstrata ahead 38p at 1112p.

The biggest Footsie fallers were BSkyB down 22.5p at 635.5p, Man Group off 3.1p at 119.7p, Lloyds down 0.5p at 31.4p, and BAE Systems off 4.1p at 291.3p.