FTSE falls back after two-day rally
The London market slipped back into the red today as optimism over bank bail-outs gave way to recession fears.
Falling oil and metal prices weighed on the FTSE 100 Index, which was 154.9 points – or 3% – lower at 4239.3 by mid-morning after a strong two-day rally.
Wall Street’s Dow Jones Industrial Average also closed lower last night as investors took advantage of the fightback to take their money off the table.
Gloomy economic sentiment was not helped by figures showing UK unemployment jumped at its fastest rate in 17 years during the three months to August.
Miners dominated the fallers board after metal prices dipped, leaving Kazakhmys down 16% or 70.75p at 362.5p, the leading Footsie faller.
Xstrata and Vedanta Resources were off 208p at 1108p and 119p at 781.5p respectively as brokers at Bernstein marked down the sector on weakening demand. Miners accounted for the top five Footsie fallers.
Crude oil was also anchored below 80 dollars a barrel, which saw BP edge 7p lower to 439.75p, with Royal Dutch Shell off 24p to 1427p.
Attention was focused on the banking sector after the Financial Times said the Treasury was under pressure to rework its £37 billion bail-out, in particular to allow some dividend income for investors.
Lloyds TSB and HBOS have been under pressure since the rescue, but Lloyds rose 8.8p to 160.1p and HBOS stemmed recent falls, down just 0.1p at 85.2p.
Barclays, which does not plan to use Government funds, continued its advance with a 3.5p gain to 249.5p, unshaken by a downgrade from brokers at HSBC.
In corporate news, pubs chain Marston’s shed 6.75p to 110.25p despite predicting results in line with expectations.
But online gaming site Sportingbet lifted 12% or 3.25p to 30.25p as it said demand remained strong, despite the weaker economic conditions.
