Footsie in the red despite early gains
Jitters over interest rates impacted on world markets today as investors awaited the US Federal Reserve’s next move on borrowing costs.
An initial gain of 49 points proved short-lived as the FTSE 100 Index followed the lead of Wall Street to close 28.9 points lower at 5652.3.
Analysts expect the uncertainty to continue for the next couple of sessions as investors prove reluctant to commit new money to markets ahead of the announcement on US interest rates on Thursday night. Another quarter point rise is expected, with the accompanying comments of the Fed an additional worry.
The interest rate concerns impacted on mining companies with Xstrata down 51p at 1904p, Rio Tinto off 60p at 2750p and Anglo American down 43p at 2095p.
Blue-chip newcomers Vedanta Resources and Lonmin were also struggling, down 27p at 1285p and 56p at 2690p respectively.
Advertising giant WPP joined the fallers board after a trading update for the first five months of the year showed like-for-like revenues growth of 4.5%, compared with 5% in the first three months of the year. The stock was 15.5p lower at 626p, a drop of more than 2%.
Tobacco company Gallaher was also caught by the weak market sentiment, even though it impressed investors with a solid trading statement.
Gallaher shares dropped 11.5p at 816p, while British American Tobacco eased 26p to 1332p.
Energy companies were among the risers in London after the price of crude oil rose above 72 US dollars a barrel. Royal Dutch Shell added 14p to 1815p and Cairn Energy cheered 26p to 2082p, while BP rose 3.5p to 613p on the day it announced plans to sell its last remaining refinery in the UK.
Power companies were under pressure for a second successive session, following Ofgem’s announcement yesterday about network investment over the next five years.
The proposals allow for lower spending than the industry had hoped for, leading to pressure on firms such as Scottish & Southern Energy, which dipped 2p to 1114p, and National Grid – down 8.5p at 588p.
But Centrica was up 2p to 271p after the managing director of its British Gas residential arm Mark Clare announced he was quitting to join Barratt Developments as its new chief executive in October. Barratt was down 3p at 924p.
Elsewhere, shares in WH Smith were up 5.75p to 472p after it set out plans to separate its retail and news distribution businesses and said recent trading had been in line with expectations.
And Carpetright was up 5p to 1235p as its annual profits came in marginally ahead of forecast after a much stronger second half than first half.
The biggest Footsie risers were Wolseley up 16p at 1166p, Cairn Energy ahead 26p at 2082p, Rexam up 6p at 493.5p, SABMiller ahead 11p at 934p.
The biggest fallers were PartyGaming down 4.5p at 116p, Xstrata off 51p at 1904p, WPP Group down 15.5p at 626p, Rio Tinto off 60p at 2750p.
