Footsie falls sharply
Hopes earlier in the week that share prices were now on an upward curve suffered a blow today as the FTSE 100 Index closed sharply down.
Disappointment that the Bank of England’s Monetary Policy Committee had decided not to cut interest rates helped drag prices lower with the benchmark index closing down 64 points at 3928.9.
The blue chip index was already on the back foot ahead of the MPC’s announcement after reports predicted it would keep the cost of borrowing unchanged because of fears over the weakness of sterling.
But confirmation of the decision helped accelerate the fall.
The drop means the blue chip index has lost ground for two successive sessions despite breaching the psychologically important 4000 barrier on Tuesday.
Analysts said the latest retreat also reflected the lack of corporate news, profit taking by investors and uncertainty over the strength of the economic recovery.
Today’s fall was led by financial stocks and pharmaceuticals with Prudential off 16p at 379.25p, Friends Provident down 4p at 103p and Norwich Union owner Aviva 20p lower at 429.5p.
The UK’s third-biggest bank Barclays was also out of favour after announcing plans for the £803 million acquisition of Spanish operator Banco Zaragozano.
The price of the deal raised eyebrows in the City and shares fell 18p to 409p, although other banks were also lower.
Abbey National eased 12.75p to 473p, Royal Bank of Scotland fell 18p to 1607p and Alliance & Leicester closed down 17p at 810p.
On a brighter note, utilities company Centrica reached the close of trading at the head of just 14 risers after the Competition Commission published an issues letter outlining possible remedies to its proposed acquisition of Dynegy. Shares rose 4.75p to 171.75p.
And Scottish Power recovered some of its losses following yesterday’s annual results with a 7.5p gain to close at 379p.
The sector appeared a safe haven for investors during a turbulent session as NationalGrid Transco lifted 5.5p to 406p.
Outside the Footsie, retailer Austin Reed tumbled 10% after announcing that it was no longer in talks on a potential takeover. Shares tumbled 14p to close at 126.5p.
And shares in ports operator P&O were 5.5p lower at 212.5p as it reported a difficult start to the year for passenger numbers in its UK ferries business.
Elsewhere, shares in retail chain Laura Ashley got some respite – rising 4% or 0.25p to 6.37p – after the company announced chief executive Kwan Cheong Ng had stepped down following annual losses of £14.1 million.
And supermarket Somerfield headed 1.75p higher to 101.5p amid reports that entrepreneur John Lovering, who is vying to buy the group, had hired Morgan Stanley to advise on his bid.
The biggest Footsie risers were Centrica up 4.75p at 171.75p, Scottish Power up 7.5p at 379p, BHP Billiton up 4.75p at 309.75p and National Grid Transco up 5.5p at 406p.
The biggest fallers were Granada down 3.75p at 67.25p, AMVESCAP down 17.75p at 332p, Capita down 12.75p at 247p and 3i down 23p at 471p.
