FTSE close: Glencore, Next down; banks up

By Reuters
Updated: 12:24 EDT, 25 May 2011

17.15 (close)

The London market struggled to make gains today despite a rally among banking stocks, as the eurozone debt crisis continued to worry investors.

Traders snapped up banking shares after ratings agency Fitch restored some confidence to the sector by saying it does not expect to downgrade any German banks as a result of their exposure to Greece.

This helped the FTSE 100 Index close up 11.7 points at 5870.1, while in America, the Dow Jones Industrial Average rose 0.2%.

Banking stocks led the London market higher as traders took advantage of recent falls in shares caused by worries over the economic future of Greece and other struggling eurozone countries.

Barclays was up 6.2p at 271.8p, or 2%, while Royal Bank of Scotland was ahead 0.9p at 41.3p, and Lloyds was up 1p to 50.7p.

The resources sector also gave some support after an analyst said pressure for interest rate hikes in China - which would stifle demand - was likely to dwindle amid hopes that inflation has peaked.

The mining and energy sectors rebounded from earlier falls as Essar Energy rose 9.6p to 427.1p and Kazakhmys lifted 21p to 1256p.

But the London market was held back by concerns over the possibility of a Greek default and its potential impact on other indebted countries such as Spain, Portugal and Italy.

The pound was up at 1.16 against the euro, which was weakened by the eurozone debt crisis. Sterling was also up against the dollar, at 1.63, after being buoyed by trade figures that showed an increase in exports.

Retailers also weighed on the top flight after administrators announced DIY chain Focus was closing down and a number of broker downgrades hit the sector.

Next topped the fallers board, losing more than 2% or 53p at 2195p.

There was a slight recovery in the travel sector as flights at UK airports returned to normal after high levels of volcanic ash from the recent Icelandic eruption had earlier cleared UK skies.

TUI Travel was ahead 1.4p 230.7p and British Airways parent International Airlines Group was up 3.5p at 234.3p.

But airlines, including British Airways, had to axe some German services as the ash cloud moved over northern Europe.

Blue-chip newcomer Glencore fell 2.8p to 522.2p. The stock, which has been promoted to the top flight at the expense of Invensys, is still below last week's starting price of 530p.

Outside the top flight, shares in sportswear retailer JJB Sports were back under pressure after it reported a full-year loss of £181 million and said its recovery may take up to five years to complete. Shares, which were 166p last year, fell 1.8p to 24.5p.

The biggest Footsie risers were ITV up 1.7p at 69.8p, Admiral Group ahead 40p at 1688p, Barclays up 6.2p at 271.8p, and Essar Energy ahead 9.6p at 427.1p.

The biggest Footsie fallers were Next down 53p at 2195p, Burberry off 22p at 1320p, British American Tobacco down 37.5p at 2681p, and International Power off 4.2p at 316p.

15.55: The FTSE 100 has edged into the black and is trading 11.3 points higher at 5,869.7 as the end of the session approaches.

The Dow is up 14.5 points at 12,370.7.

14.50:

The Dow Jones is 9.8 points lower at 12,346.4 as worse than expected manufacturing news increases concerns that the recovery across the Atlantic is stalling.

The FTSE 100 is down 17.5 points at 5,840.9.

Brent crude is trading at just over $112 a barrel. Gold was fixed this morning at $1,527 an ounce, the same as at the previous close.

14.05:

US futures are signalling a lower open on the Dow Jones later.

Disappointing US durable goods orders for April combined with weak global markets are hitting sentiment.

The FTSE 100 is off 16.3 points at 5,842.1.

12.00:

JJB shares fell 1.4p (5.3%) to 24.8p - they have plunged 85% from 166.3p to around 23.5p in the last year - as warned its recovery could take up to five years.

Reporting a 9% increase in operating losses to £73.9m, it said its restructuring plan to refit 150 stores was not going to be easy. Read the full story here.

The Footsie remains 7.5 points down at 5,850.

There was a slight recovery in the travel sector as flights at UK airports returned to normal after high levels of volcanic ash from the recent Icelandic eruption had earlier cleared UK skies.

Thomas Cook was ahead 0.7p at 146.4p and British Airways parent International Airlines Group was up 1.3p at 232.1p. But airlines, including British Airways, had to axe some German services as the ash cloud moved over northern Europe. Thomson Holidays owner TUI Travel, which has significant business in Germany, declined 0.2p to 229.1p.

In retail, B&Q parent Kingfisher, which bought 31 Focus stores, fell 0.7p to 276.2p.

10.35:

The economic news today is that GDP remained unchanged following the second reading by the Office for National Statistics.

Gross domestic product grew by 0.5% in the first quarter of 2011.

Elsewhere, Nationwide Building Society saw profits leap by 30% after it cut its provisions for bad debts, although business from mortgages and savings was slow.

The UK's largest building society posted underlying profits of £276m in the year to April 4.

The group was helped by a 35% reduction in provisions for bad debts to £359m, as well as a cost-cutting drive saving around £5m.

Here's more.

The FTSE 100 has recovered some of the losses from earlier today but is still 9.47 points lower at 5848.94.

10.00:

Overnight falls in Asian markets dragged the FTSE 100 down this morning, surrendering some of the gains seen yesterday to stand 7 points lower at 5,851.

It was down 30 points at one stage, but has rallied somewhat.

The mining sector, which accounts for around 15% of the Footsie, was hobbled by global growth fears after Japan's earthquake and tsunami meant the country's exports fell 12.5% in April compared with a year earlier.

Fallers in London include blue-chip newcomer Glencore after a decline of 7.3p to 517.6p. The stock, which has been promoted to the top flight at the expense of Invensys, is now some way off Thursday's starting price of 530p.

'I don't think yesterday's rally held a great deal of conviction for investors,' said Keith Bowman, an analyst at Hargreaves Lansdown.

'We still have lots of concerns over the strength of the global economy, especially with the eurozone sovereign debt worries, so caution is the key,' Bowman added.

Ex-dividend factors accounted for the top three FTSE 100 fallers, with Amec down 21p (1.8%) to 1,141p, International Power down 7.2p (2.2%) to 313p, and Next down 51p (2.3%) to 2,197p - all lost their payout attractions, clipping one point off the index.

Other heavyweights to slide included BP, which declined 4.7p to 451.7p, and Royal Dutch Shell was down 18p (0.9%) to 2,101p as the crude price fell by over $1 a barrel, reversing Tuesday's gains, hurt by a firmer dollar. BAE Systems dropped 2.9p to 325.8p.

Market heavyweight Vodafone also dragged on blue chip sentiment losing 0.8p (0.5%) to 169p as Nomura cut its stance on the mobile telecoms firm to 'neutral' from 'buy'.

Banks put back some of the losses seen yesterday after Barclays rose 2.2p to 267.8p, HSBC added 2.05p to 625.5p and part-nationalised Royal Bank of Scotland gained 0.4p (1.1%) to 40.9p.

Outside the top flight, shares in sportswear retailer JJB Sports were back under pressure after it reported a full-year loss of £181m and said its recovery may take up to five years to complete. Shares, which were 166p last year, fell 2.25p to 24p.