FTSE 100 close: US fears drag on Footsie
The Footsie took a tumble today as grim warnings on the UK and US economies tripped up investor optimism.
Wall St blues: US traders digested bad news from the Fed.
Barely a handful of firms struggled into the black on the London market as sentiment was rocked by weaker projections for the US economy - followed by a downgrade from credit ratings agency S&P on the outlook for UK debt.
The move from stable to negative was accompanied by a warning that a debt burden approaching 100% of GDP could threaten the UK's AAA rating.
The FTSE 100 index closed 122.9 points down at 4,345.5 as the pound slipped against both the euro and the dollar.
US stocks tumbled after the open on Wall Street, as signs of more job market weakness and an anaemic Fed regional survey fuelled fears that economic recovery could be slow. The Dow Jones industrial average was down 131.7 to 8,290.3 at the London close.
Just six stocks survived the sell-off in the top flight, with miners and banking stocks among those affected.
Cable & Wireless led the fallers' board after posting full-year results. The slide for C&W - down 9.5% or 15p to 142p - came as a surprise to the market given the company reported a better-than-expected 36% rise in underlying earnings to £822m.
Analysts blamed profit taking and said there were worries that recent growth was not sustainable, particularly in light of an uncertain outlook.
But traders told Reuters it was caused by market talk that directors were selling shares. The company was not available for comment.
British Land shares were down 8% or 34p to 380p after the property company said net asset value per share - a key industry measure - had fallen 64%.
Drugs firms GlaxoSmithKline and AstraZeneca were among the select few on the risers board after an analyst upgrade for Glaxo, which rose 0.5p to 1063.5p - or 0.5%.
AstraZeneca meanwhile gained 11p to 2,646p after announcing a preliminary injunction to stop a generic copy of one of its drugs.
In the second tier, pubs group Mitchells & Butlers fell 9% after it said chief executive Tim Clarke had quit the group because of a £69m loss on an interest rate hedge. Pre-tax profits also fell 48% to £44m, causing shares to fall 23.5p to 237.75p.
Defence industry firm Qinetiq moved in the opposite direction, up 0.25p to 144p, after it reported a sharp rise in annual profits and said trading prospects had been lifted by a healthy order book in North America.
And the Daily Mail and General Trust slipped 3.4% as the group reported a 47% slump in half year profits amid poor advertising revenues. Shares fell 10.5p to 301p.
Shares in Clinton Cards rose 37%, or 6.25p, to 23p after the retailer placed its loss-making Birthdays greeting card chain into administration. Birthdays had been hit by the economic downturn and dire trading conditions.
Clinton will emerge as a more robust business after the unit's administration is complete, say analysts.
'It is good news for Clinton because Birthdays has been dragging the group down since acquisition in 2004. It's not ideal to lose a third of your estate but more than half of the Birthdays store base was unprofitable and now Clinton can rebuild its balance sheet," KBC said.
Tomorrow's agenda
British Airways will update investors tomorrow. Last year it recorded record profits of £883m. This time, the airline has admitted that it expects to make a £150m operating loss for the year to the end of March and to take a £75m redundancy hit. Passenger traffic fell 3.4% on the year and sector experts warn swine flu will mean even fewer people take to the skies in the coming months.
Société Générale forecasts a 3.5% rise in revenues to £9.1bn but with a near 18% jump in costs to £9.3bn, from soaring fuel costs. Investors will focus on what chief executive Willie Walsh has to say about outlook and any updates on BA's merger talks with Iberia.
The second estimate of GDP in the first three months of the year is released. HSBC predicts that the UK economy actually contracted at a slightly less marked rate than was reported last time, forecasting a 1.8% fall on the previous quarter as opposed to the 1.9% reported earlier. This translates to a 4% drop on the same time last year rather than 4.1%.
Marston's, the brewer and pubs owner, posts first-half figures. Broker Numis predicts the Pitcher & Piano owner will report a 15% drop in pre-tax profits but may say that sales are starting to recover.
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