FTSE 100 latest: SSE, British Land down
London shares gave up some ground initially as doubts emerged whether the recent rally has been justified, but later recovered.
The FTSE 100 index was 0.2 points up at points at 4,685.9. Shares going ex-dividend had accounted for a 10-points deficit in the index. The Footsie has gained 35% since hitting its year lows in March.
'The corporate earnings (and economic numbers) we've had do not justify the extreme rally. Just because the expectations were so bad didn't make the numbers good,' said Simon Denham, managing director at Capital Spreads.
'Other asset values - bonds, oil, gold, are looking a bit toppy. If we go below 4,590-odd we're back in the old trading range and (that) would not bode well for the run-up to Christmas,' Denham added.
The pound also slumped as minutes of the Bank of England's interest rate meeting earlier this month revealed that Governor Mervyn King and two other MPC members had wanted to expand its quantitative easing programme by even more than £50bn.
The uncertainty prompted a flight away from riskier stocks, with banks among those prominent on the fallers board. HSBC was down 21p at 635p, while Standard Chartered was off 29p at 1361p and Barclays fell 1.75p to 344.8p.
A survey from accountants KPMG also found Britain's that UK banks are likely to see their battered retail arms slide to a loss in the second half of 2009, as the cost of bad loans, tough competition and wholesale funding continues to weigh.
Commodity stocks were hit by falling raw material prices and doubts over the pace and extent of economic recovery: Antofagasta lost 17p to 701p, Lonmin was off 33p at 1356p and Anglo American gave up 30.5p to 1,800.5p.
Two major shareholders in Anglo have backed new chairman John Parker's bid to buy time and stave off rival Xstrata's merger proposal.
Eurasian Natural Resources, however, provided some respite for the sector. Its shares rose 8% or 62p to 839p, after the Kazakh-focused miner posted a fall in first half earnings that was smaller than expected.
Scottish & Southern Energy was one of the big Footsie fallers, losing 62p to 1,072p after going ex-dividend.
Other utility stocks benefited from the risk-averse session, as National Grid climbed 8p to 576p and United Utilities lifted 5.1p to 437.1p.
British Land suffered its second big fall of the week - down 11.9p to 471.1p - as investors took profits in the wake of fading takeover speculation and after the property company published first quarter results. Hammerson was off 8p at 385.1p.
Serco shares climbed 3.8p to 431.5p as Evolution Securities initiated coverage of the outsourcing group with a 'buy' rating and 500p target.
Elsewhere, car dealership Lookers fell 3% after interim results signalled ongoing caution over the new car market, despite encouraging signs. Shares fell 2p to 67p, despite a 14% rise in underlying pre-tax profits coming in well ahead of market expectations.
Airports ground handling and news distribution group John Menzies posted one of the biggest gains of the session after revealing it expected a boost to revenues worth £180m following new contract wins. With half-year profits ahead of expectations, shares rose 23% or 53.75p to 288p.
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