FTSE close: HMV, M&S fall; Capita up

By Ed Monk for Thisismoney.co.uk
Updated: 12:21 EDT, 1 March 2011

17.15 (close)

The London market surrendered earlier gains as oil prices surged after fears that Saudi Arabia, the world's biggest oil exporter, could be rocked by a political uprising.

The FTSE 100 Index was also dragged down after Federal Reserve chairman Ben Bernanke warned that US economic growth will not be strong enough to deliver a rapid fall in the country's high unemployment rate.

The Footsie, which had been up as much as 46 points, closed down 58.3 points at at 5935.8 - or nearly 1% - as investors feared that unrest could disrupt oil production in Saudi Arabia.

Brent crude prices pushed ahead to 113.6 US dollars a barrel as fears over Saudi Arabia combined with the ongoing crisis in oil-producing Libya.

Wall Street's Dow Jones Industrial Average was down 0.3% after Mr Bernanke warned in a Senate testimony that the country still needs the support of its multi-billion US dollar quantitative easing programme and that oil prices were set to hit the wider economy.

The pound was up after the Markit/CIPS Purchasing Managers' Index showed more input price rises, which will increase pressure on the Bank of England to raise interest rates. Sterling was at 1.63 against the dollar and at 1.18 against the euro.

The global economy worries meant commodity stocks lost earlier gains, with Lonmin up by just 2p at 1838p and African Barrick Gold 3p higher at 582p.

Mexican miner Fresnillo was up 2p to 1596p after record silver and gold prices and higher production ensured its profits hit one billion US dollars (£618 million) for last year.

Capita was the Footsie's biggest riser - up 5%, up 37.5p to 763p - after the support services firm said it was in discussions with Zurich Financial Services about a potential extension of the pair's existing UK contract.

The rise built on gains seen after strong results from Capita last week. Fresh from Primark's warning yesterday of subdued trading since January, retail stocks were further hit by HMV's second profits alert this year.

Next dropped another 36p to 1940p, Marks & Spencer declined 6.6p to 339.8p and B&Q owner Kingfisher fell 4% - or 11.4p to 243p. HMV, which also warned it would breach certain terms on its bank loans, slumped nearly 22%, by 4.5p to 16.25p.

HSBC shares remained under pressure after its warning on Monday that its higher regulatory burden will impact future profitability. Shares fell another 20p to 658p after dropping 5% yesterday.

Barclays, which announced a deal to buy one million credit card accounts from internet bank Egg, fell 6.6p to 313.25p.

The biggest Footsie risers were Capita Group up 37.5p at 763p, Petrofac ahead 55p at 1448p, Intertek up 53p at 1857p, and Associated British Foods ahead 26.5p at 993p.

The biggest Footsie fallers were Carnival down 153p at 2601p, Kingfisher off 11.4p at 243p, GKN down 8.4p at 201.5, and Intercontinental Hotels Group off 54p at 1314p.

15.00: Over on Wall Street, the Dow Jones has fallen on opening. A short time ago it was 24 points lower at 12,202.31.

Back in London, the FTSE 100 is now 20.33 points off at 5973.69.

13.00:

A lunchtime update – The Footsie has given up this morning's gains and is now 9 points lower at 5891.

Housebuilders fell back despite those improved full-year profits from Persimmon (see 11.40 update) and a rare month of house price growth (see 10.50 update), as reported by Nationwide.

Persimmon shares slipped 20.5p to 449.9p in the FTSE 250 Index. Bellway dropped 16p to 657p and Redrow fell 6.65p to 128.65p.

Mexican miner Fresnillo jumped 3% - up 49.5p to 1643.5p - after record silver and gold prices and higher production ensured its profits hit one billion dollars for last year. The company also said it would invest $800m in projects this year.

Back in the top flight, shares in Capita jumped 5%, up 34p to 759.5p, after the support services firm said it was in discussions with Zurich Financial Services about a potential extension of the pair's existing UK contract. The rise built on gains seen after strong results from Capita last week.

11.40:

UK's largest housebuilder has shown there is light in the economic darkness with massive profits rises.

Persimmon racked up pre-tax profits of £95m compared with just £7m the previous year. Despite this, shares are lower by 20.9p (4.4%) at 449.5p this morning, with sober forecasts for the year ahead.

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10.50: The Footsie is hanging on to gains from first thing this morning and is currently 22.34 points higher at 6016.35.

In economy data, there was better news for the property market today. The Nationwide reported a small, and rare, rise in house prices during January.

And the Bank of England reported a rise in mortgage lending, which is needed if prices are not to fall again this year.

In currency, the pound is at $1.6307 compared to $1.6251 at the previous close. Against the euro, the pound is at €1.1789 compared to €1.1780 at the previous close.

09.45:

The FTSE 100 rose back above 6,000 as markets shrugged off oil price fears, with insurers gaining on an EU ruling and HMV lower after a profits warning.

The Footsie was 29.98 points better off at 6023.99 in early trading, following Asian markets higher,.

Fresh signs of oil price stability produced strong gains for mining stocks.

The price of Brent crude remained near $112 a barrel as traders bet that safer supplies can continue to meet demand, despite the ongoing crisis in oil-producing Libya and uncertainty elsewhere in the region.

Among commodity stocks on the front foot, Antofagasta lifted 37p to 1444p, Lonmin cheered 40.5p to 1876.5p and Kazakhmys improved 30.5p to 1474.5p.

Fresh from Primark's warning of subdued trading since January, retail stocks were dealt a fresh blow today after HMV's second profits warning this year. The retailers shares were 23% lower at one point before settling 2.75p – 13% - lower at 18p by 9.45am.

Next dropped another 29p to 1947p, Marks & Spencer declined 4.15p to 432.25p and B&Q owner Kingfisher fell 4.7p to 249.7p.

Insurers crept higher after an EU ruling which means that they will no longer be able to calculate insurance premiums based on gender. It will mean they cannot charge male drivers more than female ones purely because of their gender.

The markets showed faith in insurers' ability to make a profit from ruling and Admiral, 19p up at 1,708p, and Aviva, 0.5p up at 466.9p, both gained.

HSBC shares remained under pressure after its warning on Monday that its higher regulatory burden will impact future profitability. Shares fell another 6.9p to 671.1p after dropping 5% yesterday.