FTSE 100 close: Twelfth night for Footsie

By Adrian Lowery
Updated: 12:00 EDT, 28 July 2009

The Footsie was faltering in its search for a record-breaking winning stretch of 12 days today, as strong results from BP failed to impress investors.

The FTSE 100 index closed 57.3 points down at 4,528.8, after a record-equalling eleventh day of gains yesterday.

The index is now 11% higher than two weeks ago, and up over 33% from its six-year trough in March. The market felt some downward pressure from the US with the Dow Jones opening 81.5 points down at 9027.

'The important aspect for global equity markets now will be just how far the market retraces,' said David Fineberg, Head of Trading Western at CMC Markets. 'The last time the market rallied for 11 consecutive day back in late 2004 early 2003 we saw the Footsie wipe out those gains over the space of two weeks.

'With Wall Street also trading lower we could be in danger of having a fairly aggressive sell-off. However, with US GDP numbers set for release on Friday we may see a degree of calm before these numbers tell us just how close to a global recovery we are.'

BP's second-quarter profits of £1.9bn beat expectations but could not stop the profit-takers pricing down energy stocks. The figure is less than half what BP made in the same quarter last year.

The oil giant said its cost-cutting programme is on track and chief Tony Hayward was cautiously optimistic on the oil giant's prospects for the rest of the year. But BP's shares suffered, falling 16p to 503p.

Royal Dutch Shell and BG Group - due to post half-year figures later in the week - were down 22p at 1580p and 24p at 1082p respectively.

Mining firm Xstrata led the Footsie lower with a 6.5% or 51.4p fall to 735.2p after disappointing the market with first-half production figures. Peers on the back foot included Kazakhmys - off 57.5p to 789p - and Vedanta Resources, down 53p to 1655p.

Randgold Resources plunged 349p to 3,685p after the gold miner announced a share offering to fund the development of its Gounkoto and Massawa projects in Senegal and Mali as it reported a rise in quarter-on-quarter profits and production.

Sage Group was the biggest gainer, with a leap of 6.3p to 191.7p after Evolution Securities responded to the financial software firm's in-line trading update by raising its rating to 'neutral' from 'sell'. The broker also increased its target price to 168p, from 120p.

Deutsche Bank meanwhile retains its 'buy' stance on Sage hinged on the view that the stock 'represents an attractive mix of defensive qualities coupled with some operational leverage in macro-recovery on the back of recent cost-saving actions'.

Pearson was a big blue-chip riser brokers issued positive comments after yesterday's solid second-quarter results, with both Cazenove and Goldman Sachs upgrading ratings for the publisher.

Retailers were having a better session after falls yesterday following downbeat comments on the sector from ratings agency Fitch. Next was 29p up at 1683p, Marks & Spencer gained 5p to 333.5p and B&Q owner Kingfisher added 0.75p to 203p.

Power firm National Grid also found favour in the wake of its solid trading update yesterday, adding 6.5p to 571p.

Meanwhile, doorstep lender Provident Financial saw a 6.5% fall despite reporting a hike in half-year profits to £53.1m as it came under fire for charging 'extortionate' interest rates. Shares fell 56p to 799p.

Out of the top flight, Games Workshop was having a good morning after the fantasy gaming company reported bumper results for the full-year 2009, prompting Singer to raise its earnings forecasts by 11% for 2010.

The company, which makes tabletop fantasy and futuristic battle games, posts pre-tax profit of £7.5m for the year to 31 May 2009, against £1.1m in 2008, while debt was reduced to £1.6m from £10.1m a year before.

Singer says Games Workshop has plenty of room for expansion in the UK and the US and further improvements in Europe. The broker forecasts pre-tax profit of £8.8m in 2010, rising to £10.9m in 2011, and says the company's valuation remains undemanding. Shares were 6p worse-off at 309p.

TOMORROW'S AGENDA

• Oil and gas explorer BG Group reports second-quarter earnings. Deutsche Bank thinks that earnings at BG's liquefied natural gas arm will receive a boost from its hedging strategy.

• A slight pick-up in the housing market will be seen in the latest mortgage approval figures.

• Cadbury posts first-half results. Sales growth at the chocolate and chewing gum group is expected to have accelerated in the second quarter.

• Reckitt Benckiser is is tipped to unveil like-for-like growth of 6% in its second-quarter results.