FTSE Close: Rolls-Royce, Sainsbury fall; SSE up

By Ed Monk for Thisismoney.co.uk
Updated:

 

17.15 (close)

Dealers monitor their screens on the trading floor of IG Index in London

Market watcher: The City will watch inflation news.

The rally on London's FTSE 100 Index came to a halt today as world markets retreated on concerns that China will tighten policy to cool rising inflation and curb growth.

Stocks fell sharply after China's central bank announced it would raise the amount of cash that banks need to hold in reserve.

In London, mining giants - that benefit significantly from Chinese demand - provided much of the downforce on the Footsie, which closed 58.3 points lower at 5816.9.

Wall Street's Dow Jones Industrial Average was down nearly 40 points in early trading.

There was little impact on stocks following the Bank of England's assessment that the UK should be able to avoid a double-dip recession. However, the Bank kept economists guessing about whether more quantitative easing (QE) could be on the cards early next year.

The pound strengthened - hitting a fresh six week high against the euro - as it became clear there was little likelihood of an imminent QE move.

Sterling hit 1.17 against the euro and nearly $1.61.

But investors on both sides of the Atlantic were cautious ahead of a key meeting of world leaders and as Europe continues to grapple with government debt problems. The G20 will meet on Thursday and Friday in South Korea.

Metal group Lonmin was the worst hit of the London mining stocks, down 5% or 88p to 1806p.

Strong gains in the utility sector failed to offset the commodity falls, with Scottish & Southern Energy rising by nearly 4% after it confirmed the group remained on track to meet full-year forecasts despite a 6% fall in half-year profits to £385.5m.

SSE - up 42p to 1160p - gave a further boost to investors by maintaining its dividend policy and hiking its half-year payout by more than inflation.

The results sparked increases for National Grid, up 7.5p to 583p, while water firm Severn Trent and British Gas owner Centrica also benefited - ahead 9p to 1438p and 1.9p to 336.2p respectively.

Meanwhile, Rolls-Royce shares were back under pressure after Singapore Airlines said it had taken three of its Airbus A380 superjumbos out of service to make "precautionary changes" to the planes' engines.

Shares in the manufacturing giant have fallen sharply since the failure of a Rolls-Royce engine on a Qantas superjumbo flight which had just taken off from Singapore. The stock was 18.5p lower at 588p today, dashing the tentative recovery signs seen since an update from the company on Monday.

Other fallers included Sainsbury's, which dropped 4p to 373.2p despite the supermarket group meeting market forecasts with an 8% rise in underlying half-year profits to £332m.

BAE Systems followed SSE on the risers board as it posted a second successive gain after management yesterday played down market fears over defence spending cuts. The stock lifted another 10.9p to 359.4p.

The biggest Footsie risers were Scottish & Southern Energy ahead 42p to 1160p, BAE Systems up 10.9p to 359.4p, Tullow Oil up 17p to 1248p and National Grid up 7.5p to 583p.

The biggest Footsie fallers were Lonmin down 88p to 1806p, Antofagasta off 56p to 1405p, Kazakhmys down 59p to 1494p and Eurasian Natural Resources down 37p to 972p.

15.00: The Dow Jones has, as predicted, opened lower today.

The Dow is 60.10 points lower at 11,277.27 in the first hour of trading on Wall Street.

That has pushed London shares ven lower and the Footsie is now 42.85 points lower at 5832.34.

13.40: The FTSE 100 continues to struggle today - down 33.97 points at 5841.22.

Some 68 of the 100 blue chips are in negative territory today.

On Wall Street later today, the futures markets expect the Dow Jones to open lower.

12.40:

A lunchtime update - the FTSE 100 is 28.65 points lower at 5846.54.

Scottish & Southern Energy (SSE) posted the biggest rise of the session up 5% or 56p to 1174p. Read more on that here.

SSE actually announced a 6% fall in half-year profits to £385.5m but said it remained on track to meet full-year forecasts. It gave a further boost to investors by maintaining its dividend policy and hiking its half-year payout by more than inflation.

The results lifted the rest of the sector with National Grid up 9.5p to 585p, United Utilities ahead 8p to 628p and Severn Trent 16p higher at 1445p.

Prudential reported strong asian sales today. Read more.

The Pru highlighted the importance of its Asian markets after robust sales in the region drove a 17% rise in third quarter sales. The shares are 0.5p better off at 631p.

Outside the top flight, shares in Superdry owner SuperGroup were 3% lower, off 33p to 1178p, after the fashion chain reported a jump in sales of 68.4% to £57.5m in the three months to 31 October.

The drop reflected profit-taking after a doubling in the company's share price since its flotation in March.

11.30:

Shares in Scottish and Southern climbed 50p (5.5%) to 1,168p after reporting interim results ahead of analyst expectations and raising its dividend, with analysts at Bank of America Merrill Lynch upgrading their rating on SSE's stock to 'buy'.

'With the stock having underperformed the UK utilities since June, we see the renewed clarity and management confidence as positive and upgrade to Buy,' BoA/Merrill Lynch analyst Fraser McLaren writes in a note.

Shares in Dominion Petroleum rose 8.5% to 3.8p after the oil explorer bolstered confidence in its exploration of offshore Tanzania, with early results from 3D seismic supporting drilling.

'Dominion has an interesting portfolio in East Africa which is emerging as one of the most exciting oil and gas exploration provinces in the world,' Canaccord Genuity analysts say in a note.

'Hence, we expect the group will attract the attention of bigger industry players and that this, in turn, will ensure that it is able to execute its drilling plans,' says the brokerage, which maintains its 'buy' rating on the stock.

The Footsie is down 29 points to 5,846.

10.15:

The FTSE 100 moved lower today as investors booked commodity profits from yesterday, while Rolls Royce and BP fell again and Sainsbury came under pressure.

In morning trading the Footsie was 15.25 points lower at 5859.94.

The heaviest fallers were the miners – Lonmin dropped 43p to 1,851p, Randgold Resources 115p to 6,150p, BHP Billiton 44p to 2,425p and Rio Tinto 81p to 4,373p.

The falls represented profit-taking after rises in oil and metal prices in recent days – but also reflected a potential reduction in Chinese demand.

Rolls-Royce shares were back under pressure today after Singapore Airlines said it had taken three of its Airbus A380 superjumbos out of service to make 'precautionary changes' to the planes' engines.

Shares in the manufacturing giant have fallen sharply since the failure of a Rolls-Royce engine on a Qantas superjumbo flight which had just taken off from Singapore. The stock was 2% or 15p lower at 591.5p today, dashing the tentative recovery signs seen since an update from the company on Monday.

Other fallers included Sainsbury's, which dropped 7.4p to 369.8p despite the supermarket group meeting market forecasts with an 8% rise in underlying half-year profits to £332m.

Lloyds Banking Group and Royal Bank of Scotland rose 0.6% and 0.2%, respectively, as investors awaited the latest Bank of England inflation report.

Economists expect the BoE's short-term growth and inflation projections, released at 1030 GMT, to be revised up from their August paths, due to recent above-forecast GDP and CPI outturns.

King's news conference should give some clue as to how seriously the MPC considered following the US Federal Reserve's lead on Thursday and expanding its QE programme.

Scottish & Southern Energy moved higher, up 5% or 56p to 1174p, after it announced a 6% fall in half-year profits to £385.5m but said it remained on track to meet full-year forecasts. It gave a further boost to investors by announcing an above-inflation rise in its dividend.

BAE Systems followed SSE on the risers board as it posted a second successive gain after management yesterday played down market fears over defence spending cuts. The stock lifted another 11.3p to 359.8p.

Reader service: Free brochure guides

Completely free insider guides on the latest investing trends...

sterling stacked on a financial chart

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos

{"status":"error","code":"499","payload":"Asset id not found: readcomments comments with assetId=1707669, assetTypeId=1"}