FTSE 100 latest: Shares turn red despite Anglo boost

By THIS IS MONEY
Updated: 12:14 EDT, 22 June 2009

Shares struggled for a footing today despite a huge merger in the mining sector that had been expected to drive the FTSE 100 higher.

High hopes: Traders are expecting gains from the miners.

Confirmation that Xstrata was seeking a merger deal with rival Anglo American had raised hopes of a further boost to the sector. But is was only Anglo American that saw the benefit, rising 75p to 1,698, while Xstrata fell 45.9p to 635.1p.

Other miners felt the pain of cheaper commodity prices. Joint venture partners Rio Tinto and BHP Billiton fell 80.5p to 2014.5p and 61p to 1,345p respectively, while Lonmin fell 102p to 1,148p.

Overall, the FTSE 100 was 111.9 points lower at 4234.1.

The biggest faller in early trading was British Airways after reports that it was considering the sale of its OpenSkies subsidiary only a year after it acquired it. The reported move comes as the airline battles against a slump in the number of business passengers flying on trans-Atlantic routes. BA shares were 8.5% or 11.8p lower at 124.6p.

Energy firms were weaker as oil fell below $70 a barrel. BP, 19p lower at 478p, Royal Dutch Shell, 75p down at 1,516p, BG Group, 65p lower at 1,001p, Tullow Oil, 57.5p down to 867.5p, and Cairn Energy, down 85p to 2,216p, all suffered.

'Oil prices were off slightly, hurting energy stocks and there's some weakness in banks,' said Richard Hunter, head of equities at Hargreaves Lansdown. 'Now as we come into the summer period in the absence of any positive news, we are likely to trend sideways.'

In a difficult session for the leisure and travel sector, Thomas Cook shares fell 13.25p to 207p and InterContinental Hotels dropped 27p to 596p.

Economic news centered on the housing market, with property research website Rightmove reporting that asking prices dipped 0.4% in the five weeks to 13 June with the average price now £226,436.

Banks joined the ranks of fallers. Barclays, down 10p to 264p, HSBC, 10p weaker at 512p, Standard Chartered, 30p lower at 1,175p, all fell.

The week ahead

This week sees results from consumer electricals rivals DSG International and Kesa Electricals - the owners of Currys and Comet - while Bank of England Governor Mervyn King will also appear before MPs.

The City will be hoping for positive news from Stagecoach on its dispute with the Government over its South West Trains franchise when the rail and bus firm reports results on Wednesday.

Packaging and office products firm DS Smith has braced investors for a sharp fall in annual profits on Thursday after a difficult year.

A gloomy pre-close statement from the FTSE 250 firm - which is the UK's leading producer of recycled paper and corrugated packaging - warned it was facing 'volatile and weaker demand' in almost all markets.

Bank of England Governor Mervyn King will be back in the spotlight on Wednesday when he gives evidence to MPs on banking reform and his latest inflation predictions.

Mr King's comments to the Treasury Select Committee will be closely watched after he repeated his calls for more power to be given to the Bank at his Mansion House speech this week.