FTSE close: Antofagasta down; Savills up

 

Updates to follow throughout the day.

London Stock exchange

17.00

The FTSE 100 Index slid almost 2% into the red today as the spectre of US interest rate hikes overshadowed trading.

The dollar gained strongly against the pound as markets reacted to news that the US Federal Reserve could soon undo some emergency support moves amid improving economic signs.

Mining and banking stocks felt the brunt of the sell-off as the Footsie finished 102.7 points down at 5217.6, with a surprise fall in UK sales volumes during November also hitting UK retail stocks.

Wall Street's Dow Jones Industrial Average was also on the back foot in early trading after a surprise rise in unemployment claims.

In London, the dollar's two-month high against sterling ensured a tricky session for the mining heavyweights, with Xstrata off 57p to 1030p and Antofagasta 38.5p lighter at 905p.

Meanwhile, an uncertain week for banking stocks continued as ailing US giant Citigroup sold shares for a price so low that the US Government delayed plans to sell down its stake.

Fears that the Bank of England could follow the Fed in ending its special support measures also hit sentiment. Lloyds Banking Group was worst hit, down 4.48p to 51.1p or 8%.

Retailers also struggled after official figures for November showed the first fall in sales since May, fuelling fears over Christmas trading. B&Q owner Kingfisher declined 6.6p to 226.5p, Argos and Homebase firm Home Retail Group lost 12.3p to 283.7p, and Marks & Spencer was 2.9p cheaper at 399.1p.

In the FTSE 250 Index, Currys owner DSG International dropped 0.18p to 35.25p, a fall of 1%. Kesa Electricals, which owns rival Comet, also shed 5.5p to 149p despite positive broker comments after yesterday's results.

Among firms issuing end-of-year trading updates, property firm Savills added 4% after it said continued strength in the Asian property market and an increase in UK commercial transactions had given a bigger than expected boost to 2009 trading. Shares were 11.2p higher at 301.2p.

Construction and regeneration group Morgan Sindall was not far behind as it said it expected to meet its expectations for 2009, despite a smaller order book of £3.2bn at the end of the year. Shares were 16p higher at 616p.

Car dealership Inchcape also lifted 0.25p to 28.35p after forecasting results slightly ahead of expectations.

Builders' merchant Travis Perkins made similar comments but shares fell 19.5p to 795p as the company issued a cautious forecast on 2010 prospects.

All Bar One pubs group Mitchells & Butlers was 3.1p lower at 256.1p after the latest development in the boardroom battle at the business. Mitchells urged investors to support it against a rebel shareholder group at the firm's annual meeting next month.

The biggest Footsie risers were Rentokil Initial up 1.5p at 106.5p, Invensys up 2.1p at 283.4p, G4S up 1.8p at 259.6p and Cadbury up 3.5p at 792p.

The biggest Footsie fallers were Lloyds down 4.48p at 51.1p, Barclays down 18.15p at 273.85p, Xstrata off 57p at 1030p and Home Retail Group, which finished 12.3p lower at 283.7p.

16.00

A weak open on Wall Street prompted by jitters over the US Federal Reserve's rate-setting intentions put the skids under London shares and banks in particular this afternoon.

The Footsie's losses accelerated after the Dow Jones lost 81 points after the open to trade at 10,360. The UK index was last 92.4 points lower at 5,227.9, with Royal Bank of Scotland 1.11p lower at 30.74, Lloyds Banking Group 4.2p down at 51.43p and Barclays 16.25p off at 275.75p.

US stocks fell at the opening bell after an unexpected rise in new weekly US jobless claims. But it was the minutes to the last rate-setting meeting of the Fed that really worried investors.

Though the Fed reiterated its pledge to keep interest rates near zero, it noted improvements in the economy and detailed the beginnings of a plan to dismantling a number of its extraordinary lending measures in 2010.

The news stoked speculation the central bank might increase interest rates sooner than expected, leading many investors to shift out of stocks.

'The Fed's upgraded assessment of market conditions is indicative that it's nudging closer to what must be its ultimate goal of withdrawing financial support in early 2010,' said Philip Gillett, sales trader at IG Index.

America's ultra-low borrowing costs have contributed to a nine-month bull run in stocks and the sharp fall in the dollar this year.

As the dollar strenghtened on the staement, mining stocks also suffered: Xstrata was 53p down at 1,034p and Antofagasta 38p off at 905.5p.

14.45

Signals that the Fed would begin to undo some of its emergency support as the economy recovered pushed the dollar to a three-month high, weakening commodity shares.

The FTSE 100 was down 47.4 points to 5,272.9 by the mid-session as retailers felt the brunt of a surprise fall in sales volumes during November.

Pressure on top-flight stocks is likely to continue this afternoon with futures markets indicating early losses on Wall Street.

The strength of the dollar ensured a tricky session for the heavyweight mining sector, with Xstrata off 43p to 1045p and Antofagasta 24.5p lighter at 919p.

Meanwhile, an uncertain week for banking stocks continued after Barclays shed 9.5p to 282.5p and Standard Chartered fell 39p to 1538p. Part-nationalised Lloyds Banking Group was the biggest faller with a drop of 2.45p to 53.13p.

Retailers also struggled after official figures for November showed the first fall in sales since May, fuelling fears over Christmas trading. B&Q owner Kingfisher declined 5.6p to 227.5p, Argos and Homebase firm Home Retail Group lost 6.6p to 289.4p, and Marks & Spencer was 2.2p cheaper at 399.8p.

In the FTSE 250 index, Currys owner DSG International dropped 0.36p to 35.07p, a fall of 1%. Kesa Electricals, which owns rival Comet, also shed 3.1p to 151.4p despite positive broker comments after yesterday's results.

Among firms issuing end-of-year trading updates, property firm Savills added 2% after it said continued strength in the Asian property market and an increase in UK commercial transactions had given a bigger than expected boost to 2009 trading. Shares were 6.4p higher at 296.4p.

Construction and regeneration group Morgan Sindall was not far behind as it said it expected to meet its expectations for 2009, despite a smaller order book of £3.2bn at the end of the year. Shares were 16p higher at 616p.

Car dealership Inchcape also lifted 0.2p to 28.3p after forecasting results slightly ahead of expectations.

Builders' merchant Travis Perkins made similar comments but shares fell 8p to 806.5p as the company issued a cautious forecast on 2010 prospects.

All Bar One pubs group Mitchells & Butlers was 0.4p lower at 258.8p after the latest development in the boardroom battle at the business. Mitchells urged investors to support it against a rebel shareholder group at the firm's annual meeting next month.

12.15

US stock futures point to a weaker start for Wall St, with the Dow Jones industrial average set to open down 0.3%.

Bank of America has plumped for insider Brian Moynihan as its new chief executive, ending months of speculation about who would succeed Kenneth Lewis to lead the largest US bank.

The FTSE 100 index was 40.3 points down at 5,280.0.

11.30

Shares in the US are expected to fall on opening this afternoon. The Dow Jones is expected to slide 51 points to 10,339, according to broker BGC.

11.00

Barclays lost 6.8p to 285.2p after the US state of Ohio's attorney general filed a lawsuit against the mortgage servicing unit of Barclays Capital that accuses mortgage companies of failing the state's troubled homeowners.

Shire was a top blue-chip faller, off 21p to 1,172p, as UBS cut its rating on the stock to 'neutral' from 'buy', mainly on valuation grounds.

Rentokil Initial was a top riser ahead of its relegation from the FTSE 100 next week. Its 3.3p jump to 108.3p built on gains yesterday after Deutsche Bank hiked its target price and estimates for the support services group.