Fresh oil fears weigh FTSE down

The London market surrendered earlier gains as oil prices surged after fears that Saudi Arabia, the world's biggest oil exporter, could be rocked by a political uprising.

Fresh oil fears weigh FTSE down

The London market surrendered earlier gains as oil prices surged after fears that Saudi Arabia, the world's biggest oil exporter, could be rocked by a political uprising.

The FTSE 100 Index was also dragged down after US Federal Reserve chairman Ben Bernanke warned that economic growth will not be strong enough to deliver a rapid fall in the country's high unemployment rate.

The Footsie, which had been up as much as 46 points, closed down 58.3 points at 5935.8 - or nearly 1% - as investors feared that unrest could disrupt oil production in Saudi Arabia.

Brent crude prices pushed ahead to $113.6 a barrel as fears over Saudi Arabia combined with the ongoing crisis in oil-producing Libya.

Wall Street's Dow Jones Industrial Average was down 0.3% after Mr Bernanke warned in a Senate testimony that the country still needs the support of its multi-billion dollar quantitative easing programme and that oil prices were set to hit the wider economy.

The pound was up after the Markit/CIPS Purchasing Managers' Index showed more input price rises, which will increase pressure on the Bank of England to raise interest rates. Sterling was at £1.63 against the dollar and at $1.18 the euro.

The global economy worries meant commodity stocks lost earlier gains, with Lonmin up by just 2p at 1838p and African Barrick Gold 3p higher at 582p.

Mexican miner Fresnillo was up 2p to 1596p after record silver and gold prices and higher production ensured its profits hit $1bn (£724.07m) for last year.

Capita was the Footsie's biggest riser - up 5%, up 37.5p to 763p - after the support services firm said it was in discussions with Zurich Financial Services about a potential extension of the pair's existing UK contract. The rise built on gains seen after strong results from Capita last week.

Fresh from Primark's warning yesterday of subdued trading since January, retail stocks were further hit by HMV's second profits alert this year.

Next dropped another 36p to 1940p, Marks & Spencer declined 6.6p to 339.8p and B&Q owner Kingfisher fell 4% - or 11.4p to 243p. HMV, which also warned it would breach certain terms on its bank loans, slumped nearly 22%, by 4.5p to 16.25p.

HSBC shares remained under pressure after its warning on Monday that its higher regulatory burden will impact future profitability. Shares fell another 20p to 658p after dropping 5% yesterday.

Barclays, which announced a deal to buy one million credit card accounts from internet bank Egg, fell 6.6p to 313.25p.

The biggest Footsie risers were Capita Group up 37.5p at 763p, Petrofac ahead 55p at 1448p, Intertek up 53p at 1857p, and Associated British Foods ahead 26.5p at 993p.

The biggest Footsie fallers were Carnival down 153p at 2601p, Kingfisher off 11.4p at 243p, GKN down 8.4p at 201.5, and Intercontinental Hotels Group off 54p at 1314p.

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