FTSE close: Inflation; Punch up, TUI down

By Ed Monk for Thisismoney.co.uk
Updated: 13:15 EDT, 22 March 2011

17.10 (close)

The three-day bounce back on London's FTSE 100 Index came to an end today as weak economic news on both sides of the Atlantic hit world markets.

A double-dose of worse than expected figures in the UK painted a bleak picture of the economy on the eve of Chancellor George Osborne's Budget, while Wall Street was also impacted by data showing US home prices fell for the third month in a row in January.

The Footsie closed 23.4 points lower at 5762.7, halting a recent rally that saw it recoup many of the losses suffered after Japan's earthquake and nuclear crisis.

America's Dow Jones Industrial Average slipped into the red and indices across Europe also eased back.

London stocks were knocked after the Office for National Statistics revealed inflation hit a 28-month high at 4.4% in February and said public finances plunged further into the red by £11.8bn last month.

Both sets of data were worse than economist forecasts and overshadowed a more upbeat outlook for the manufacturing sector after the CBI revealed order books hit their highest level for three years.

The inflation hike further increases the chances of an imminent interest rate rise, which sent the pound higher - up 0.4% to 1.64 dollars and 0.6% to 1.15 euros.

Today's market falls came despite an improved session in Japan, where the market clawed back losses seen after this month's massive earthquake, amid signs that authorities had stabilised the Fukushima nuclear complex.

But traders were still concerned by the ongoing fighting in Libya and the uncertainty surrounding future military action in the North African state.

Commodity stocks were among those on the back foot in London, with silver miner Fresnillo shedding 30p at 1455p.

Elsewhere on the fallers board, Thomson Holidays owner TUI Travel was hit by rising oil prices and concerns over Libya. Its shares fell 2% or 4.5p to 228.2p.

In the FTSE 250 Index, Punch Taverns rose 2% after it announced plans to demerge its Spirit managed pubs business from its tenanted estate.

The move, which chief executive Ian Dyson said would allow the acceleration of growth in the Spirit division, caused shares to rise 1.7p to 75.3p.

Meanwhile, Forth Ports added 20p to 1634p after it recommended a takeover offer from infrastructure fund Arcus valuing the owner of Tilbury docks in London and Scotland's largest container port at Grangemouth at £760m.

Shares in sports retailer JJB surged by 12% - up 3p to 29p - after the embattled firm was saved from administration after landlords backed a rescue deal.

The chain said its creditors and shareholders approved a company voluntary arrangement (CVA) - its second in as many years - which will see it close 43 unprofitable stores, place a further 46 under review and move to monthly rental payments.

The biggest Footsie risers were Essar Energy up 9p to 449.4p, Cairn Energy ahead 8.3p to 428p, BG Group up 24p to 1505.5p and Resolution up 4.1p to 283p.

The biggest Footsie fallers were GKN down 7.4p to 189.1p, Carnival off 78p to 2452p, Johnson Matthey down 49p to 1835p and ITV down 1.9p to 84.7p.

15.35: We have more on Cairn Energy, which has gained 5p to 424.7p after its full-year results got a favourable reception from investors.

The oil explorer also expressed confidence the Indian government would eventually let it go ahead with a stalled deal to sell up to 51% of its Cairn India stake to Vedanta Resources.

The Dow is down 11.1 points at 12,025.4 as US investors digest a fall in house prices and disappointing manufacturing data. The ongoing crises in Libya and Japan are also weighing on sentiment.

The FTSE 100 is 40 points lower at 5,746.1.

15.20:

On Wall Street, the Dow Jones has opened lower, falling 22 points to 12,015 in early trading stateside.

Back in Blighty, the FTSE 100 contiues to slip. It is now 41.46 lower at 5744.63.

13.25:

At lunchtime, the FTSE 100 is lower following bleak data on inflation and borrowing, although there have been gains for the banks and Punch.

The FTSE 100 Index fell 10.7 points to 5775.6 after the Office for National Statistics revealed inflation hit a 28-month high at 4.4% in February and said public finances plunged further into the red by £11.8bn last month.

Both sets of data were worse than economist forecasts and overshadowed a more upbeat outlook for the manufacturing sector after the CBI revealed order books hit their highest level for three years.

Commodity stocks were among those on the back foot in London, with energy firm Petrofac dropping 34p to 1376p, silver miner Fresnillo shedding 38p at 1447p and Anglo-Australian miner Rio Tinto down 47.5p at 4010p.

Elsewhere on the fallers board, Thomson Holidays owner TUI Travel was hit by rising oil prices and concerns over Libya. Its shares plummeted nearly 2% or 4.6p to 228.1p.

BSkyB shares moved ahead 1.5p to 830p as investors were unperturbed by a report from a media group alliance, which claimed it was 'fanciful' to hope Sky News will be kept independent under Rupert Murdoch's bid to take full control of the broadcaster.

Financial stocks gave the Footsie some support as Royal Bank of Scotland added 0.7p at 42.1p, Barclays was ahead 2.3p to 291.8p and insurer Prudential advanced 5.5p to 728.5p.

In the FTSE 250 Index, Punch Taverns rose 4% after it announced plans to demerge its Spirit managed pubs business from its tenanted estate.

Forth Ports added 23p to 1637p after it recommended a takeover offer from infrastructure fund Arcus valuing the owner of Tilbury docks in London and Scotland's largest container port at Grangemouth at £760m.

Shares in sports retailer JJB surged by 26% - up 6.8p to 32.8p - ahead of a key vote on its future today when it asks landlords and shareholders to approve its second rescue deal in as many years.

11.45:

The FTSE is now lower - down 4.35 at 5781.74 - in thin trading.

One riser is Cairn Energy, which has risen 6.9p, or 1.7%, to 426p after some well-received results.

10.40:

The FTSE 100 has had the wind taken from its sails by disappointing inflation and borrowing data.

The index was around 35 points higher on the day before the news of higher than expected inflation in February. CPI rose from 4% to 4.4%.

Figures release at the same time showed UK public borrowing jumped to £11.8bn in February, higher than the circa £6bn rise expected.

Shares prices fell after the news and the FTSE 100 now stands 4.5 points higher at 5790.66.

09.25:

The FTSE 100 made gains today as global markets continued to rally, although inflation and borrowing data weighed on traders' minds. Banks gained while Punch toasted a demerger.

The London market continued its recovery today after stocks in Japan clawed back some of the losses seen after this month's massive earthquake.

With the Dow Jones Industrial Average closing 1.5% higher overnight, the FTSE 100 Index added 25.7 points to 5811.7 as the top flight continued the turnaround in fortunes seen since Thursday.

Earlier, the Nikkei 225 in Tokyo jumped 4% to 9,608 amid signs that authorities had stabilised the Fukushima nuclear complex.

UK investors will eye both borrowing data and inflation for signs on the future direction of the economy. Analysts began the day predicting a worrying rise in both.

Financial stocks were among those on the front foot in London, with Barclays ahead 4.4p to 293.9p, Royal Bank of Scotland 0.5p stronger to 41.9p and insurer Prudential 8.5p higher at 731.5p.

In the FTSE 250 Index, Punch Taverns rose 5% after it announced plans to demerge its Spirit managed pubs business from its tenanted estate.

The move, which chief executive Ian Dyson said would allow the acceleration of growth in the Spirit division, caused shares to rise 3.9p to 77.45p.

Meanwhile, Forth Ports added 25.5p to 1639.5p after it recommended a takeover offer from infrastructure fund Arcus valuing the owner of Tilbury docks in London and Scotland's largest container port at Grangemouth at £760m.