FTSE investors keep powder dry ahead of Fed update
Investors were in nervous mood today ahead of the Federal Reserve’s decision on US interest rates later this week.
The latest worries over another potential hike in the cos aof borrowing were seencross world markets, including London as the FTSE 100 Index remained near to its opening mark to close 10.9 points lower at 5681.2.
The mining sector propped up the Footsie but those gains were offset by power companies after regulator Ofgem disappointed the industry by recommending £4bn (€5.8bn) in investment for Britain’s energy networks over five years.
National Grid had previously signalled a figure of around £7bn (€10.1bn) as it looks to bring new sources of renewable energy on line.
The news disappointed power generation companies with shares in Scottish Power down 7.5p to 576p, Scottish & Southern Energy off 13p at 1116p and British Gas owner Centrica 5.25p lower at 269p.
Lower energy stocks contributed to the pressure on the Footsie, with BP off 7.5p at 609.5p and Royal Dutch Shell 20p lower at 1801p.
As well as progress from the mining sector, retailer Marks & Spencer lifted 12p to 578p amid reports that it planned to start its summer sale a week later than expected.
Elsewhere in the top flight, steel giant Corus experienced a lively session as investors reacted to the merger of steel giants Mittal and Arcelor.
The prospect of further consolidation in the sector lifted shares for a time, but the Anglo Dutch steelmaker eventually closed 2.25p lower at 428.5p.
In contrast, shares in consumer products group Reckitt Benckiser rose 26p to 1922p, as investors appeared relieved that it had missed out to Johnson & Johnson in the auction of Pfizer’s consumer healthcare arm.
The City also digested deals in the mid-cap sector for hotels group De Vere and the potential pairings of Stanley Leisure and London Clubs International and Balfour Beatty and Birse.
Shares in mid-cap stock De Vere put on 4% or 33.5p to 848p after it agreed a £723.5m (€1bn) takeover by Alternative Hotels Group, which is owned by Malmaison and Hotel du Vin boss Richard Balfour-Lynn.
The stock was given added impetus by the possibility that private equity group Permira has yet to rule out tabling an improved takeover offer.
De Vere was joined on the way up by Stanley Leisure – ahead 7.5p to 642.5p - after the casino operator confirmed it was in talks over a possible merger with London Clubs International. Shares in London Clubs were unchanged at 107p.
And civil engineering firm Birse was up 20% or 2.75p to 16.25p after it backed a £32m (€46m) takeover by larger rival Balfour Beatty, although shares in Balfour drifted 1.75p lower to 328p.
The biggest Footsie risers were Shire up 16p at 770.5p, Marks & Spencer ahead 12p at 578p, WPP Group up 12p at 641.5p, Lonmin up 47p at 2746p.
The biggest fallers were SABmiller down 37p at 923p, Smith & Nephew off 11p at 414.5p, Centrica down 5.25p at 269p, ITV off 2p at 102.75p.
