Footsie down among US interest rate fears
Buyers deserted the London market today on fears that its recent rally had run out of steam and nervousness over the future path of US interest rates.
Losses were seen across all sectors with only a handful of companies – mostly those that are either at the centre of bid speculation or due to report results this week – escaping the sell-off.
This sent the FTSE 100 Index away from recent five-year highs – off 64.1points at 5972.2 by the close.
The benchmark index for UK stocks received little support from Wall Street where the Dow Jones Industrial Average was also mired in negative territory.
Analysts believe the US Federal Reserve is unlikely to soften its line on interest rates when it meets tomorrow for the first time since Ben Bernanke officially took over the reins from Dr Alan Greenspan.
Among the few stocks to make headway in London today was ITV as traders speculated that the private equity consortium stalking the broadcaster was preparing a possible second bid.
Apax Partners, the Blackstone Group and the investment arm of Goldman Sachs were understood to be working on a new offer for ITV, which for the first time will include a cash alternative. Shares were up 1%, or 0.75p to 128.5p, while BSkyB was 3.5p higher at 546.5p elsewhere in the media sector.
ITV was trailing Alliance & Leicester on the Footsie risers board amid fresh speculation that it was next in line to attract a bid.
Shares in the bank had been 2% lower earlier in the session, but later stood 10p higher at 1168p, a gain of 1% on the start of the day.
There was also interest in Babcock International and AB Ports in the second tier as both gained on the back of takeover speculation.
Shares in Babcock were up 11.75p to 327.25p as investors continued to bank on a bidding war following an approach last week from VT Group and BAE Systems.
AB Ports – Britain’s biggest ports operator – initially jumped 5% before settling 3% or 21p higher at 717p after it became a £2.3 billion bid target of a consortium featuring Goldman Sachs.
Back in the top flight, a string of finance stocks slipped into the red to drag the Footsie back from its recent highs.
Royal Bank of Scotland was off 24p to 1843p and Barclays lost 12p to 672p.
Insurers were also in retreat, with Legal & General 2.5p lower at 143.25p and Prudential off 9p to 672p.
Oil giant BP also weighed on the market – down 9.5p to 659p – and rival Royal Dutch Shell was not immune either as it weakened 5p to 1835p.
The day’s biggest blue chip risers were Enterprise Inns up 8p to 929.5p, Alliance & Leicester ahead by 10p to 1168p, International Power up 2.25p at 286.25p, and BSkyB ahead by 3.5p to 546.5p.
The heaviest fallers were Schroders NV down 35p to 1147p, Schroders off 34p to 1208p, Cable & Wireless down 3p at 109.25p and AstraZeneca down 76p to 2899p.
