US budget deficit impacts on FTSE

Continuing talks over the US budget deficit sapped appetite for risk today as the FTSE 100 Index started the week on the back foot.

With little sign that politicians are any nearer to avoiding the country’s fiscal cliff of steep tax hikes and budget cuts on January 1, investors decided the best move was to keep money off the table.

The top flight stood 31.9 points lower at 5889.9, even though Asian stock markets were higher after the landslide election success of Japan’s Liberal Democratic Party boosted hopes for greater economic stimulus.

In London, one of the market’s rising stars of recent years was dimmed by a second gloomy update in the space of as many months.

Temporary power provider Aggreko’s warning that its 2013 performance was likely to be slightly lower than this year, as it struggles to fill the void left by its £59 million London Olympics contract, caused shares to slide 17%.

The decline of 362.5p to 1762.5p took the company’s price back to near where it started 2012.

Vodafone put pressure on the top flight as shares fell 4.3p to 156.5p after Dutch authorities raised £3 billion from their auction of the 4G spectrum, fuelling speculation that the UK version will cost more than forecast.

Meanwhile, retailers were doing well as analysts gauged the performance of the sector in the final days before Christmas.

Many shopping centres reported a busy weekend of trade and John Lewis said it posted record weekly sales of more than £140 million for the second week in a row.

B&Q owner Kingfisher rose 0.75p to 277.1p and Primark owner Associated British Foods added 6.5p to 1524.5p, while outside the top flight Sports Direct International was 19.35p higher at 386.75p and Dunelm rose 7p to 649p.