Fresh US economy fears push FTSE into red
London’s FTSE 100 Index slipped into the red today after fresh fears over the US economy affected trading on both sides of the Atlantic.
The Footsie had been clinging on to positive territory for much of the session but dropped late on when Federal Reserve chairman Ben Bernanke warned the US economic outlook had deteriorated and that further interest rate cuts may be needed.
His comments saw London’s blue-chip index close 0.8 points down at 5879.3. It had been nearly 60 points up earlier in the day. New York’s Dow Jones Industrial Average fell nearly 1% after Bernanke’s warning.
Banks were the main losers in London, as Swiss giant UBS confirmed full-year losses of £2bn and mortgage lender Bradford & Bingley’s poor results yesterday continued to knock sentiment.
The poor start to the results season from Bradford & Bingley hit mortgage giants Halifax Bank of Scotland and Alliance & Leicester in the top tier, off 34p at 631p and 15.5p to 543.5p respectively. Barclays was also in the red, down 10.75p at 443p, with Royal Bank of Scotland joining the slide, losing 8.25p to 361p.
Meanwhile FTSE 250 stock B&B failed to recover from yesterday’s 23% fall, losing another 0.5p to 186.5p.
US-reliant building firm Wolseley also lost ground amid the weak trading, losing 17.5p to end the day at 680p. The gloom also spread to several retailers, with Argos-owner Home Retail Group off 11p at 264.5p, and B&Q owner Kingfisher down 3.5p to 132.1p.
Losses among banks were countered by advances for heavyweight mining stocks as takeover talk buoyed shares. Metals group Vedanta Resources was the leading beneficiary – up 50p to 2004p – as the sector accounted for three of the Footsie’s top five risers. Xstrata lifted 72p to 3852p and Lonmin rose 79p to 3359p.
Blue-chip drinks giant Diageo was also among the risers, up 47p to 1081p, after the group posted healthy interim profits and maintained full-year forecasts. The group cheered the results of a concerted advertising push for Guinness with news of a 3% gain in European sales volumes.
Elsewhere, nuclear power plant firm British Energy gained 9p to 542p on speculation that the company could be broken up.
Meanwhile insurer Standard Life made advances after announcing it had reinsured half of its total annuity liabilities in a move that should add at least £100 million to operating profits this year. Shares rose 3.5p to 210.75p.
In the second tier, betting group Ladbrokes was among the risers, up 9p at 321.25p, after renewed rumours of bid interest from the private equity sector.
The Footsie’s four biggest risers were Diageo which was up 47p to 1081p, Reckitt Benckiser up 78p to 2801p, Sainsbury’s up 9.75p to 380p, and Vedanta Resources, 50p better off at 2004p.
The four biggest fallers were Halifax Bank of Scotland, down 34p to 631p, Home Retail Group down 11p to 264.5p, British Land off 39p at 969p and Schroders which ended 38p down at 969p.
