FTSE 100 close: US data weighs on Footsie
The Footsie lost ground this afternoon as US data and the shadow of a rumoured Lloyds cash call weighed on the index.
Weaker than expected numbers from the US dragged on the index, as wholesale inventories fell by more than expected in the run-up to the US Fed rate decision tomorrow.
By mid-afternoon, the FTSE 100 index closed 50.8 points lower at 4,671.3. Tomorrow will be a pivotal day for the markets, with the quarterly Bank of England Inflation Report due for release.
'For a long time talks of inflation and more recently deflation have left investors wary and if tomorrow's report makes grim reading we could see this sell-off become a lot more aggressive,' said Jimmy Yates, head of equities at CMC Markets.
'If the weakness in oil and commodities continues and tomorrow's inflation report is grim reading there is potential for us to see some sustained downside after four straight weeks of gains.'
Continuing speculation over a possible £15bn rights issue saw Lloyds shares shed 6.9p or 7% to 90.99p, after falling 4% yesterday.
Investors and traders fear it will shore up its own capital with a share issue rather than rely on the Government's asset protection scheme. Insiders say Lloyds is using its forecasts of a strong pick-up in the economy to bolster its case for a reduction in its £15.6bn APS fee.
Royal Bank of Scotland, which is said to be in similar negotiations over the APS agreement - which will see £325bn of its assets underwritten by the taxpayer - was 2.48p down at 42.83p.
Insurer Friends Provident finally agreed to be taken over by Clive Cowdery's Resolution vehicle for £1.86bn - or 79.4p per share, a 6% premium to Monday's closing price. Friends shares inched up 2p to 73p, while Resolution's fell 6.75p to 82.25p.
But power generation firm International Power was the top FTSE 100 riser, up 7% or 18p to 266.4p, after it posted a 12% rise in half-year operating profits to £555m. Currency effects helped to offset challenging US and British markets for the owner of Rugeley power station.
This was well received by the rest of the utilities sector, with National Grid up 6p at 570p and Scottish & Southern Energy ahead 11p at 1,126p.
Smith & Nephew added 2.8p to 479.7p after Morgan Stanley raised the medical device maker to 'equal-weight' from 'underweight' and upped its price target to 504p from 463p.
InterContinental Hotels fell 20p to 728p as the world's biggest hotelier moved to cut costs further as it warned of tough trading through the rest of 2009 and reported a 38% drop in first-half profit.
TUI Travel fell 5.3p to 252.1p ahead of its third-quarter results tomorrow. Its German owner TUI AG said it was preparing to give its former container shipping unit Hapag-Lloyd a further €420m, people familiar with the situation told Reuters.
Elsewhere on the results front, services and maintenance firm Interserve jumped 4% or 8.2p to 235p in the FTSE 250 Index after reporting a 19% rise in interim profits.
Bakery chain Greggs fell 11p to to 400p, after it said sales had slowed in recent weeks.
Broadcaster ITV was another strong mover in the FTSE 250 after Morgan Stanley upgraded the company in the wake of last week's half-year results. Shares responded to the note with a gain of 1.46p to 44.96p.
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