FTSE close: US blow; Kingfisher down

By Ed Monk for Thisismoney.co.uk
Updated: 12:14 EDT, 2 June 2011

17.05 (close)

Market watcher: Gloomy US data has hit shares.

The London market plunged further into the red today as fears over the strength of the US economy compounded fresh concerns over the eurozone debt crisis.

The US Labor Department said first-time applications for unemployment benefits fell to 422,000, which, while better than expected, is still elevated.

A separate report confirmed US workers were less productive in the first three months of 2011 compared with the end of last year as economic activity slowed.

The FTSE 100 Index closed 80.7 points lower at 5847.9 as the gloomy US picture added to a decision by credit ratings agency Moody's to further downgrade Greece's debts, cutting its rating by three notches from B1 to Caa1 - just five notches short of default.

The euro strengthened, however, after European Central Bank president Jean-Claude Trichet called for much tougher fiscal intervention within the euro zone.

The pound was down against the single currency at 1.13 and was also down against the dollar at 1.63.

The weak economic outlook led traders away from riskier assets - with weighty mining stocks losing around 2%.

Leading the sector lower was copper giant Antofagasta, down 40p at 1269p, while Anglo-Australian firm Rio Tinto was off 112.5p at 4142.5p and silver miner Fresnillo dropped 50p to 1428p.

The banking sector was hit by Moody's move on Greek debt, with Barclays off 3.9p at 265.7p, Lloyds Banking Group dropping 1.5p at 48.5p and Royal Bank of Scotland down 0.1p at 41.8p.

Chip designer ARM Holdings was hit by fears over global growth - despite Microsoft previewing its new Windows 8 software, which will be powered by ARM chips. Shares fell 0.5p to 571p.

Filters and precious metals firm Johnson Matthey closed near the top of the fallers board despite posting forecast-beating annual results showing a 14% rise in pre-tax profits in the year to March to £261m.

The Hertfordshire-based group said the soaring price of cerium oxide - used in the oxygen storage part of petrol filters - could impact its catalysts business by between £15m and £20m this year, up from £5m last year.

Public services company Serco topped the shortened risers' board, with a rise of nearly 3%, after Credit Suisse upped its target price for the stock. Shares added 25p to 597.5p.

B&Q owner Kingfisher produced one of the biggest falls in the top flight, even though its first quarter profits impressed analysts after the April sunshine and run of bank holidays boosted demand. Shares were 3% lower, off 2.8p at 279.3p.

Outside the top flight, the market was similarly unimpressed by another strong set of results from online retailer ASOS.

The company reported a 41% rise in underlying profits to £28.6m - which was in line with expectations - after strong overseas trade, which accounted for 43% of its £324m in sales in the year to March 31.

Brokers Investec Securities said it maintained its sell rating on ASOS on valuation grounds. Shares dropped 8% or 194p to 2144p.

The biggest Footsie risers were Serco up 25p at 597.5p, Capita Group ahead 13.5p at 737.5p, Sage Group up 2.6p at 287.6p and Pearson ahead 9p at 1135p.

The biggest Footsie fallers were Fresnillo down 50p at 1428p, Johnson Matthey off 68p at 2013p, Xstrata down 44.5p at 1375.5p and Wolseley off 62p at 1959p.

14.45: The Dow Jones has opened 10.8 points lower at 12,379.4 after weekly US jobless claims fell but by less than commentators had forecast.

In London, the FTSE 100 is 42.4 points into the red at 5,886.2.

Shares in fashion retailer ASOS are in the doldrums, down 213p at 2.125p, despite a strong rise in annual profits.

It launched websites in the US, Germany and France in its past financial year, and has plans to set up in Italy, Spain and Australia. Chief executive Nick Robertson has also declared his intention to eventually launch in China.

We have more here, including analyst reaction.

13.05:

At lunchtime the FTSE 100 is stuck 51.58 points lower at 5877.03.

The dour mood has been compounded by credit ratings agency Moody's which issued a further downgrade to Greece's debts, cutting its rating by three notches from B1 to Caa1 - just five notches short of default.

US stocks, however, were set for a slightly higher open as traders awaited weekly jobless claims data, which is expected to offer some respite.

Chip designer ARM Holdings was hit by fears over global growth - despite Microsoft previewing its new Windows 8 software, which will be powered by ARM chips. The Cambridge-based firm hit the bottom of the blue-chip index, falling 17.5p to 554p.

The weak economic outlook diverted traders away from riskier assets - with weighty mining stocks losing around 2%.

Leading the sector was copper giant Antofagasta, down 35p at 1274p, Anglo-Australian firm Rio Tinto off 112p at 4143p and silver miner Fresnillo dropping 31p to 1447p.

The banking sector was hit by Moody's move on Greek debt, with Barclays off 0.9p at 268.75p, Lloyds Banking Group dropping 0.5p at 49.5p and Royal Bank of Scotland down 0.1p at 41.7p.

12.00:

We have more on Kingfisher, including reaction from City analysts that sheds light on why the shares are down following a strong set of quarterly results.

Increased sales of barbecues, garden furniture and plants during a warm spring helped to boost earnings at the owner of DIY giant B&Q.

It reported a 21% rise in group retail profit to £174m in the three months to April 30. Sales rose 3.3% to £2.73bn.

The stock is 7.3p lower at 274.8p.

Meanwhile, the FTSE 100 is down 46.7 points at 5,881.9. Anthony Grech, head of research at spreadbetter IG Index, said: 'There's an element of the FTSE playing catch up this morning following the steady slide by the US indices.

'It's the same old concerns that have sent jitters through investors on various occasions this year - worry about the stability of the economic recovery and just how much worse than expectations the US unemployment numbers will be tomorrow.

'Add into this the opinion from Moody's that Greece has a 50% chance of defaulting and it's not too surprising that the UK index is down by around 1% so far today.'

Brent crude is trading at just above $114 a barrel. Gold was fixed this morning at $1,540.75 an ounce compared with $1,533.75 at the previous close.

11.05:

The Footsie has halted losses but remains 51.26 points lower at 5877.35.

In currency, the pound is at $1.6372 dollars compared to $1.6401 at the previous close. Against the euro the pound is €1.1360 compared to €1.1362 at the previous close.

10.05:

The FTSE 100 dropped today as fresh fears that the US economic recovery could be stalling prompted a wave of selling.

The Footsie fell on opening and is currently 52.52 points lower at 5876.09. That follows on from a decline of 61 points yesterday.

Disappointing data showing the US private sector created a below-forecast 38,000 new jobs in May triggered a 2% slump for the Dow Jones Industrial Average last night and put renewed pressure on other markets. Japan's Nikkei 225 fell by more than 1.5%.

The reduced risk appetite meant miners fell by as much as 3%, while chip designer ARM Holdings was a casualty with a decline of 18.25p to 553.25p.

B&Q owner Kingfisher produced the biggest fall in the top flight, even though its first quarter profits impressed analysts after the April sunshine and run of bank holidays boosted demand. Shares were 3% lower, off 9.9p at 272.2p.

Another strong set of results from online retailer ASOS also received a lukewarm response from City, with its shares falling 195.5p to 2142.5p.

A 41% rise in underlying profits to £28.6m was in line with expectations, but Investec Securities said it maintained its sell rating on valuation grounds.