FTSE Close: Cairn up; Fed & UK debt

By Ed Monk for Thisismoney.co.uk
Updated: 12:11 EDT, 21 September 2010

17.00 (close)

Watching brief: Investors will watch public sector borrowing data.

Uncertainty surrounding the latest policy decision by the US Federal Reserve saw London's blue chip share index slip into the red today.

The rally seen yesterday was put on hold as investors waited to see if America's central bank might take new actions to stimulate the economy.

The FTSE 100 Index soared 1.7% yesterday, pushing past the 5600 barrier for the first time since late April, but fell 26.4 points today to 5576.2.

The Dow Jones Industrial Average on Wall Street also dropped into red in early trading despite encouraging news that the construction of US homes and apartments rose last month to the highest level since April.

Monday's optimism had seen the Dow soar by 1.4% the previous session to reach its highest close since May 13.

Most economists think the US central bank will leave policy unchanged, which could trigger a short-term sell-off in markets.

The dollar weakened due to volatility surrounding the Fed's decision, with the pound and euro gaining ground against the greenback.

Sterling edged a little higher to $1.56.

Among stocks in London today, one of the biggest gains came from Cairn Energy after an update on its exploration activities off the coast of Greenland.

While the Edinburgh-based company abandoned one of its wells because it does not have commercial gas, shares rose 2% or 9.7p to 436.5p after analysis of hydrocarbons from another site confirmed the presence of two oil types.

Lloyds Banking Group lost some of yesterday's 3% gain seen after it announced that chief executive Eric Daniels was planning to retire next year. The part-nationalised bank's shares closed down 0.5p to 76.9p.

Supermarkets also shed some of the gains seen on Monday, with the benefits of a positive broker note on the sector fading away.

Tesco eased 4.5p to 433p, Sainsbury's slipped 2.3p to 391.8p and Morrisons was 1.8p cheaper at 304.5p.

In another quiet session for corporate results, JD Sports Fashion took centre stage with a 36% rise in half-year profits to £19.3m.

The figures were ahead of expectations and shares rose despite the company giving an uncertain outlook for trading prospects going forward. The stock finished 26.5p higher at 849.5p - a 3% rise.

Also in the second tier, shares in oilfield services provider Wellstream rocketed by 29% after it revealed a number of takeover approaches.

The stock rose 176p to 785p and helped FTSE 250 peer John Wood Group also make gains, ahead 25.6p to 416.2p as traders saw Wellstream's news as a sign of the potential for mergers and acquisitions in the oil and gas service sector.

The biggest Footsie risers were Vedanta Resources up 49p to 2202p, Cairn Energy ahead 9.7p to 436.5p, Wolseley up 29p to 1498p and Smiths Group up 22p to 1242p.

The biggest Footsie fallers were Eurasian Natural Resources down 25p to 889.5p, African Barrick Gold down 12.5p to 586.5p, Centrica off 7p to 334p and Xstrata down 23.5p to 1167.5p.

14.45: The Footsie has remained level for the afternoon, currently 23.42 points higher at 5625.96.

On Wall Street, the Dow Jones opened slightly down. On opening it was 3 points lower at 10,751.2.

13.20: A lunchtime re-cap. Banks and commodity stocks have powered the Footsie higher today following a 1.7% surge last night, which took the top tier past 5600 for the first time since late April.

The FTSE 100 is 24.34 points higher at 5626.88.

Royal Bank of Scotland and Lloyds Banking Group were among the blue chip share risers, up 0.4p to 49.4p and 1.2p to 78.6p respectively, with Lloyds extending the 3% gain seen in the previous session after it announced that chief executive Eric Daniels was planning to retire next year.

The biggest gain came from Cairn Energy after an update on its exploration activities off the coast of Greenland.

While the Edinburgh-based company abandoned one of its wells because it does not have commercial gas, shares rose 3% or 12.1p to 438.9p after analysis of hydrocarbons from another site confirmed the presence of two oil types.

Supermarkets lost some of the gains seen on Monday, with the benefits of a positive broker note on the sector fading away.

Sainsbury's slipped 1.7p to 392.4p and Morrisons was 1.2p cheaper at 305.1p.

We've got more on the JD Sports profits. JD shares have fallen back from their recent high to stand 13p lower at 810p.

Meanwhile, Betfair has announced it will list on the London exchange, valued at £1.5bn.

And a worse than expected picture of the UK's public finances was provided when the ONS published public sector borrowing figures today.

12.10:

Uncertanity on Wall Street ahead of the latest Fed decision on rates and another economic stimulus package.

The Dow Jones Industrial Average is expected to open level, according to futures markets.

12.00:

No new high for gold today. Gold was fixed this morning at $1278.75 an ounce compared with $1279.25 at the previous close.

The metal had hit $1,284 this week - the fourth all-time high price in four days.

At noon, the FTSE 100 is 20.90 points higher at 5623.44.

10.30:

A worse than expected picture of the UK's public finances was provided when the ONS published public sector borrowing figures today.

The UK borrowed £15.302bn more in August than it took back through taxation, according to the Office for National Statistics. Borrowing on the same basis last year was £14.1bn.

The effect of that on sterling and the markets has been hard to gauge but the pound has fallen against the euro today, down to €1.1830. However,t he euro is also rallying against the US dollar as peripheral country bond yields tighten ahead of auctions in both Greece and Ireland.

The FTSE is currently 28.57 points better off at 5631.11.

09.25:

The FTSE 100 headed higher again today with Cairn and Tullow up ahead of a US Fed announcement which may include further stimulus measures.

The top flight stood 16.3 points higher at 5618.6 after climbing 1.7% on Monday to deliver its first close above 5600 since the end of April.

The rally was mirrored in New York, where the Dow Jones Industrial Average finished 1.4% higher as investors eyed the possibility of further measures from the US Federal Reserve to revitalise the country's economy.

Most economists think the US central bank will leave policy unchanged, which could trigger a short-term sell-off in markets.

Royal Bank of Scotland and Lloyds Banking Group were among the risers in London today, up 0.5p to 49.5p and 0.8p to 78.2p respectively.

The biggest gain came from Cairn Energy after an update on its exploration activities off the coast of Greenland.

While the Edinburgh-based company abandoned one of its wells because it does not have commercial gas, shares rose 3% or 12.5p to 439.4p after analysis of hydrocarbons from another site confirmed the presence of two oil types.

Tullow Oil was another riser, up 20p, or 1.56%, to 1,299p.

In another quiet session for corporate results, JD Sports Fashion took centre stage with a 36% rise in half-year profits to £19.3m.

The figures were ahead of expectations but, with the company uncertain about trading prospects going forward, shares fell back from their recent high to stand 7.5p lower at 815.5p.

In domestic economy news, UK public sector borrowing numbers will provide an assessment of Britian's debt and may move the sterling price.

Sterling edged down to seven-week lows against the euro on this morning, with investors looking to the outcome of government bond auctions in euro zone peripheral states such as Ireland and Greece.

Good auction results would ease concerns about such countries' sovereign debt, while poor demand for the paper would highlight market worries and weigh on the euro.

The pound was weaker against the euro this morning, at €1.1860. Against the dollar, sterling fell to $1.5516.