LONDON (ShareCast) - On the last full day of trading before the Christmas holiday, there was little evidence of a 'Santa Rally' on the FTSE 100 with worries about the 'fiscal cliff' Stateside providing a drag on the market.

"This week will likely be remembered for the US fiscal cliff hanging over the markets and investors’ sentiment being pulled back and forth as snippets of news, or lack of news regarding the cliff, dominated the markets," said financial trader Shavaz Dhalla from Spreadex.

Last night, Republican House speaker John Boehner was forced to withdraw his “Plan B” for dealing with the fiscal cliff due to a lack of support in the House of Representatives.

Boehner had thought that the Republican majority in the lower house would be enough to push through his proposal to avoid the impending automatic spending cuts and increase in taxes despite opposition from President Barack Obama and Democrats.

However, hard-line Republicans refused to support concessions on tax increases that left Boehner’s plan with insufficient votes to push the measure through even through just the House.

"Thus, it is now highly unlikely that a deal to avoid the fiscal cliff will be reached before Christmas and the real fear hanging over the market, is that a deal may not be reached at all," Dhalla said.

Further dampening the mood this morning was the news that UK gross domestic product (GDP) in the third quarter expanded at a 0.9% rate from the preceding three months. This final estimate was worse the initial 1% increase forecasted.

Two surveys of consumer confidence also disappointed this morning: the GfK consumer confidence survey in the UK fell from -22 to -29 in December, missing the -25 forecast; while the forward-looking German GfK survey fell from 5.8 to 5.6 for January, missing the 5.9 estimate.

Meanwhile, the Chinese MNI flash business sentiment indicator fell from 53.78 to 52.23 in November.

FTSE 100: Risk appetite wanes

Miners and financial stocks were bearing the brunt of the bearish mood this morning as investors cut positions in riskier assets on concerns over the US economy. EVRAZ, Barclays and Fresnillo were among the worst performers by midday.

ENRC was being weighed down by a ratings cut by Goldman Sachs to 'neutral' this morning. Meanwhile, insurance giant Aviva fell after selling Aviva USA Corporation - its life, annuities and asset management business - to life insurance holding company Athene Holiding for $1.8bn.

Even Xstrata was under the weather despite saying that it is set to boost ore production by a further third at its Lady Loretta mine in north-west Queensland, Australia.

BAE Systems fell despite signing a £2.5bn deal with the government of Oman to supply of Typhoon and Hawk Advanced JetTrainer aircraft. This comes two days after the company warned that full-year underlying earnings could be hit by three pence per share if it cannot agree on pricing on a large Saudi Arabian Typhoon aircraft contract.

Water providers Severn Trent, United Utilities and Pennon were making gains after regulator Ofwat backed down over changes to water company licences.

Carnival was a high riser too, rebounding after a heavy fall yesterday when the cruise company reported a fall in full-year revenues after what it called its most challenging year ever.

FTSE 100 - Risers
Carnival (CCL) 2,458.00p +2.80%
Severn Trent (SVT) 1,592.00p +1.47%
United Utilities Group (UU.) 681.50p +1.11%
Randgold Resources Ltd. (RRS) 6,015.00p +0.84%
Morrison (Wm) Supermarkets (MRW) 266.00p +0.53%
British American Tobacco (BATS) 3,122.00p +0.39%
Tesco (TSCO) 339.75p +0.34%
Admiral Group (ADM) 1,197.00p +0.34%
International Consolidated Airlines Group SA (CDI) (IAG) 186.60p +0.32%
Aggreko (AGK) 1,747.00p +0.29%

FTSE 100 - Fallers
Evraz (EVR) 255.00p -4.49%
Johnson Matthey (JMAT) 2,353.00p -2.28%
Barclays (BARC) 261.10p -2.14%
Wood Group (John) (WG.) 731.50p -2.08%
Fresnillo (FRES) 1,841.00p -1.97%
Whitbread (WTB) 2,472.00p -1.94%
Melrose Industries (MRO) 227.20p -1.94%
BAE Systems (BA.) 341.40p -1.90%
Babcock International Group (BAB) 969.00p -1.82%
Prudential (PRU) 879.50p -1.79%

FTSE 250 - Risers
Jupiter Fund Management (JUP) 290.40p +2.98%
FirstGroup (FGP) 208.80p +2.45%
Halfords Group (HFD) 341.60p +2.37%
Rank Group (RNK) 147.50p +2.36%
Telecity Group (TCY) 791.00p +2.00%
Wetherspoon (J.D.) (JDW) 539.50p +1.98%
Regus (RGU) 107.00p +1.90%
St. Modwen Properties (SMP) 228.30p +1.65%
Menzies(John) (MNZS) 629.00p +1.45%
Redrow (RDW) 164.00p +1.42%

FTSE 250 - Fallers
Home Retail Group (HOME) 128.60p -4.46%
Soco International (SIA) 341.50p -3.83%
Centamin (DI) (CEY) 41.10p -3.77%
Kenmare Resources (KMR) 30.61p -3.59%
Dairy Crest Group (DCG) 379.70p -3.53%
Ruspetro (RPO) 74.10p -3.20%
Spectris (SXS) 1,988.00p -3.02%
Taylor Wimpey (TW.) 64.70p -2.93%
Man Group (EMG) 84.00p -2.89%
Hiscox Ltd. (HSX) 453.00p -2.79%

BC

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