FTSE down as oil stocks fall
Falling oil stocks and heavy overnight losses in New York conspired to send the London market lower today.
Despite sky-high crude costs, oil giants BP and Shell both lost nearly 2% of their value as they went ex-dividend, meaning new investors no longer qualify for dividend payouts.
Mining stocks also suffered heavy losses and contributed to the FTSE 100 Index falling 30.4 points to 4965.7 by mid-morning.
The Dow Jones Industrial Average lost 107 points last night as the rally in oil and higher raw material costs sparked concern that the US Federal Reserve may accelerate the pace of interest rate increases to contain inflation.
In London, the Bank of England’s midday announcement on interest rates was expected to do little to move the market, with analysts saying there was no real expectation of a change.
BP was the heaviest Footsie faller, off 11p to 558.5p, followed by Shell, which retreated 9.25p to 489.75p. It came despite the price of a barrel of US light crude remaining close to its historic highs, standing at $54.62 today.
The fallers list was also dominated by mining companies, including Xstrata off 19.5p to 1057p and BHP Billiton down 10.5p to 742.5p.
In contrast, InterContinental Hotels saw its shares rise 3% or 21p to 686p after pledging to return £1bn (€1.4bn) to shareholders following the sale of 73 hotels.
Outside the top flight, tour operator First Choice lifted 1.25p to 175.5p as it reported a rapid recovery in sales of holidays following the Asian tsunami, which cost it more than £1m (€1.4m).
However, investors were unimpressed by news that struggling engineering group Jarvis was considering changing its name to boost its recovery drive. Shares in the FTSE small cap stock dipped 0.34p to 22p.
