FTSE Close: United Utilities, Inmarsat, Vedanta down

 

17.10 (close)

A man talks on a phone as another rubs his face in the City of London

Markets tumbled today after poor employment and manufacturing reports in the US renewed investors' concerns about the pace of global recovery.

Officials said claims for unemployment benefits rose unexpectedly last week, while the Federal Reserve of Philadelphia added that manufacturing activity in the country's mid-Atlantic region had dropped.

The FTSE 100 Index slumped 91.6 points to 5211.3, while Wall Street's Dow Jones Industrial Average was more than 1% lower by the time of London's close.

The latest data will fuel fears that the pace of recovery in the US economy is starting to slow, a sentiment shared by the US Federal Reserve last week.

The London market had earlier been in positive territory after the Office of National Statistics reported a stronger-than-expected July for UK high street retailers and signs of an improved trend for the public finances.

The CBI snapshot of the UK manufacturing sector for the last month was also positive with order books at their best level for two years.

The contrasting economic picture for the UK and United States was reflected in the currency markets, with the pound up against the greenback at 1.56 dollars and also healthier against the euro.

Today's UK retail figures, which showed sales volumes up by 1.1% in July, offered a short-lived boost to a number of stocks prior to the US setback.

However, Morrisons clung to positive territory with a rise of 5.4p to 287p while Sainsbury's shares added 1.7p to 356.9p after industry figures earlier this week suggested the pair had improved their market share.

The fallers board saw United Utilities drop 3% or 17p to 572.5p after JP Morgan downgraded the stock and said earnings forecasts were at risk because of factors such as higher property rates.

Severn Trent was also impacted by the downgrade as it fell 22p to 1300p, while in the FTSE 250 Index South West Water owner Pennon dropped 20.50p to 566p and Northumbrian Water eased 6.4p to 313.5p.

Insurers were lower after a week of speculation about potential consolidation in the sector generated buying interest. Prudential eased 17.5p to 570p and Standard Life dropped 3.4p to 205p.

On the results front, shares in Cineworld slipped despite the cinema operator reporting a 5% rise in half-year earnings to £24.4 million. It also forecast a boost from a decent schedule of film releases in the second half, but shares drifted 10.3p to 199p in the wake of the results.

John Menzies, the aviation services and newspaper distribution firm, said it expected full-year figures to exceed current market expectations. Shares were 6.5% or 27p higher at 441p.

The biggest Footsie risers were Serco Group up 14p to 562p, Arm Holdings ahead 6.1p to 320.3p, Morrisons up 5.4p to 287p and Randgold Resources ahead 50p to 5820p.

The biggest Footsie fallers were Inmarsat down 37p to 688p, Vedanta Resources off 104p to 688p, Eurasian Natural Resources down 40.5p to 886p and Cairn Energy off 20.4p to 459.3p.

13.15

The FTSE 100 index has recovered to stand 9.6 points higher at 5,312.3, on the back of some encouraging economic data.

Sterling was also given a lift after the Office of National Statistics reported a stronger-than-expected July for high street retailers and signs of an improved trend for the public finances.

The CBI snapshot of the manufacturing sector for the last month was also positive with order books at their best level for two years.

The retail figure, which showed sales volumes up by 1.1% in July, boosted confidence in a number of stocks in the sector. They included Argos owner Home Retail Group, which lifted 4p to 223.8p, while B&Q firm Kingfisher added 2.8p to 209.4p and fashion business Burberry improved 11p to 858p.

Morrisons lifted 6.4p to 288p and Sainsbury's shares rose 4p to 359.2p - a one-year high - after industry figures this week suggested the pair had improved market share.

Other consumer-facing stocks to benefit included TUI Travel as the Thomson Holidays firm received a boost following last week's profits warning. Shares were 2.9p higher at 209.4p.

There was a good reaction to results from John Menzies after the aviation services and newspaper distribution firm said it expected full-year figures to exceed current market expectations. Shares were 11% or 47.5p higher at 461.5p.

09.45

A glut of cautious broker comment on some big British stocks weighed on the London market today.

The FTSE 100 index stood 20.2 points lower at 5,282.7 despite a good session for Wall Street stocks yesterday.

'There's no question that general sentiment remains fragile,' Richard Hunter, head of UK equities at Hargreaves Lansdown, said.

'Mixed messages (are) coming from the US. There's a clear slowdown in Chinese growth, although still strong, which in turn filters through to concerns about demand,' he said.

The Footsie fallers' board was led by United Utilities, which dropped 3% or 19p to 570.5p after JP Morgan downgraded the stock and said earnings forecasts were at risk because of factors such as higher property rates.

Severn Trent was also impacted by the downgrade as it fell 20p to 1302p, while in the FTSE 250 Index South West Water owner Pennon dropped 20.5p to 566p and Northumbrian Water eased 6.5p to 313.4p.

A broker downgrade also weighed on Inmarsat, down 19.5p to 705.5p, with UBS downgrading its rating on the British satellite firm to 'neutral' from 'buy' on valuation grounds.

Insurers were also lower after a week of speculation about potential consolidation in the sector earlier lifted prices. Prudential eased 1.5p to 586p and Standard Life dropped 2p to 206.4p.

On the results front, shares in Cineworld dropped after the cinema operator reported a 5% rise in half-year earnings to £24.4m and said it expected a boost from a decent schedule of film releases in the second half.

Analysts said the performance was in line with expectations as shares drifted 4p to 205.25p in the wake of the results.

Essar Energy shares opened up 2% after the company said earnings had risen 17% in the first half of 2010 compared with the same period last year, but later fell back top trade 3.2p down at 405.4p.