FTSE 100 close: Dow falls hold Footsie back
Gains for some Footsie heavyweights today could not stop economic uncertainty denting the index, as Wall Street opened on the down again.
On the slide?: Shares have suffered this week.
The 161-point, or 2%, drop in the Dow yesterday was followed by a negative open this afteroon. The index was down 41.9 points to 8121.7 at the London close, suffering from speculation that the US economy may need further stimulus to spark a recovery that is proving elusive.
The FTSE 100 index has followed suit, with a 46.8-point drop to 4,140.2 - a three-month low. The index is down 6% this year but still 21% higher than a six-year trough set in March.
'We're having a bout of the summer doldrums. There's a perception that the green shoots may be withering,' said Philip Lawlor, chief portfolio strategist at Nomura.
'We're having a pullback, and we will look to see what kind of guidance companies give over the next three weeks (when they report second-quarter results) to determine the size of it. However I'm very confident we are not going back to the lows we saw in March.'
Highlighting the headwinds buffeting the economy, the Halifax house price index today showed prices fell 0.5% on the month in June, and were 15% lower in the three months to June compared to a year ago.
However, consumer confidence rose in June as people became more optimistic about the future of the economy, a Nationwide survey showed.
Growing unease about the health of the global economy dragged crude prices down for a sixth consecutive day, hurting some energy stocks. Cairn Energy fell 41p to 2,137p, BG Group fell 6p to 995p, and Petrofac was 18p down at 642p.
Tullow Oil was also a faller after it said it expects first-half revenue to fall by 23%, mainly due to lower oil prices.
Broker Numis said that the trading update from Europe's largest independent oil explorer was a mixed bag. Numis retains its 'hold' rating for Tullow with an 871p price target: shares today were 27p down to 863.5p.
The broker prefers Premier Oil – 27p down to 1,026p - and Dana Petroleum, 63p down to 1,259p.
Insurers bore the brunt of the latest pressure though, with Legal & General down 4.72p at 49.78p, Aviva off 28p at 303p and Prudential 25p lower at 370p.
However, some index heavywieghts helped stem the Footsie's losses. BP and Royal Dutch Shell bucked the energy stock trend to recover some of their recent losses with early gains. But both stocks closed in the red with BP down 2.8p at 465p and Royal Dutch Shell 8p off at 1447p.
Pharmaceuticals company GlaxoSmithKline, which added 16.5p to 1086p, while Vodafone cheered 0.75p to 115.2p.
Upgrades from broker Investec for Rio Tinto and BHP Billiton meant the mining pair lifted in early trading. Rio later lost ground, closing 24.5p down at 1895.5p while BHP Billiton stayed in the black - 8p up at 1308p. Elsewhere in the sector Xstrata was down 22.9p at 587.1p and Vedanta Resources off 52p at 1270p.
Fashion chain Next was the top flight's biggest riser, ahead 13p to 1531p.
Meanwhile, Marks & Spencer shares were almost 1% lower today as the embattled company prepared to answer questions from shareholders about its management structure and the dual role held by executive chairman Sir Stuart Rose.
Shares were down 2p at 306.25p.
In the second tier, construction and services firm Carillion took centre stage after revealing it expected strong first half growth in underlying earnings. With the company buoyed by outsourcing demand from public and private sector firms, shares were 1.2% or 3p higher at 252p.
The performance had a positive impact on blue-chip counterpart Balfour Beatty, which cheered 1.25p to 297.5p.
There was also better news from Magners firm C&C after the Dublin-based drinks company said trading had been boosted by the good summer weather. Shares continued their recent recovery by climbing 2% to 2.30 euros.
Shares in Booker climbed 1.25p to 35p after the cash-and-carry retailer reported a better-than-expected 7.8% rise in first-quarter underlying sales.
'The sales growth achieved in the quarter is well ahead of both our half-year assumption (up 6% on a like-for-like basis) and our full-year sales assumption (up 4.8%),' says Singer analyst Matthew McEachran.
'Although management has indicated that profits and net debt remain in line with their expectations, we expect market forecasts to edge up on the back of this announcement, possibly in the order of 3-4%,' he adds. McEachran's current full-year pretax profit forecast is £47.8m.
In small caps, Anite lost 1.5p to 28.5p after Cazenove cuts its earnings forecasts for the IT firm by 35% for next year following recent full-year results. The broker says it sees few positives in the near term to move the stock, given the disappointing outlook for the first half of 2010.
Oxford Biomedica added 0.5p to 11.25p, extending gains seen earlier this week following news that findings by the US Food & Drug Administration support further development of the gene therapy drug, Trovax.
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