London market in the red

The London market closed in the red today after US policymakers failed to signal that more emergency stimulus measures were on their way.

The FTSE 100 Index closed 56.2 points lower at 5608.3 despite US unemployment claims falling to their lowest level in four years in a rare hopeful sign for the world’s biggest economy.

Investors were left disappointed by minutes of the US Federal Reserve’s most recent meeting, which put an end to hopes of any further quantitative easing to boost growth.

David Jones, chief market strategist at IG Index, said: “While hopes for QE3 will linger on, last night’s Fed minutes have, for the moment, put the possibility of central bank action in the US on the back burner.”

The pound was down against the US dollar at 1.54, as the greenback was strengthened by the weakening prospect of further QE in the US. Sterling was down against the euro at 1.26.

Sentiment was further dampened by speculation that economic powerhouse China will tomorrow announce a worrying slowdown in gross domestic product (GDP) as the eurozone debt crisis and slowing US growth undermines its export markets.

The world’s second biggest economy is expected to announce that growth slowed to 7.9% in the second quarter of 2012, down from a near three year low of 8.1% in the previous three months.

Heavily-weighted miners, who rely on China’s thirst for fuel and metal, led London’s leading shares index lower, with Rio Tinto down 4% or 107p to 2926p and Antofagasta off 43p at 1040p.

Emerging market investment specialist Ashmore Group was the biggest faller after its assets under management fell 3.3% to $63.7bn, which was lower than City expectations. Shares fell 7%, or 22.2p to 307.8p.

Security group G4S was 3% lower, off 7.4p to 283p, after admitting that it was facing staffing issues just two weeks before the Olympic Games, prompting the Government to step in with an additional 3,500 troops.

A £3.2bn takeover deal sparked major interest in the FTSE 250 Index after the board of London-based media buying firm Aegis, which has clients including Coca-Cola and Disney, backed an offer from Japan’s Dentsu.

The deal came as a surprise to City analysts and prompted Aegis shares to rally 45% or 73.1p to 235.3p, just short of the 240p a share takeover price.

Superdry chain SuperGroup rose 15% after it spared investors another profits warning and said it would slow its growth plans to a more measured pace following a series of blunders. Shares rose 50.5p to 385p.

Associated British Foods said its budget retail chain Primark enjoyed a 16% sales boost in the 16 weeks to June 23, helped by resilient demand and more overseas store openings. Shares rose 9p to 1276p.

The biggest Footsie risers were Admiral Group up 13p at 1181p, Johnson Matthey ahead 17p at 2120p, Associated British Foods up 9p at 1276p and Resolution ahead 1.4p at 210.3p.

The biggest Footsie fallers were Ashmore down 22.2p at 307.8p, Eurasian Natural Resources off 17.3p at 393.6p, Antofagasta down 43p at 1040p and Aggreko off 74p at 1919p.