London close: Commodities, retailers slam Footsie
London suffered a severe bout of selling pressure late on as miners and oils extended losses, while Wall Street wobbled and retailers beat a retreat on UK rate hike fears.
The Office for National Statistics said this morning that consumer price inflation rose 0.3% in December to 3.0%, its highest level since comparable records began 10 years ago.
The news was largely accepted as an explanation for last week's surprise rate hike by the market, but many economists feel further rate hikes will be necessary to bring inflation back down to target.
If the inflation rate rises any further, more than 1% above the government's 2.0% target, the Bank of England will have to write to the Chancellor to explain why.
The news left retailers in the red, with Kingfisher, Home Retail and Marks & Spencer all suffering from fears that consumers will curb their spending in light of the figures.
Platinum miner Lonmin also unsettled after it announced that it would completely rebuild its number one furnace following a leak in December.
The rest of the mining sector also dropped back following weakness in metal prices. Antofagasta, Xstrata, Rio Tinto and BHP Billiton ended lower.
Meanwhile, US light crude for February delivery fell $1.48 to $51.51 a barrel, leaving Royal Dutch Shell, BG and Cairn Energy nursing losses.
BP also dropped as it said it will implement the recommendations made by an independent safety review panel, which concluded there were "material deficiencies" in process safety performance at the oil major's US refineries.
Tate & Lyle was weaker after Merrill Lynch downgraded the shares to 'neutral' from 'buy' citing concerns over near term supply issues.
Defence firm Smiths Group was among the top risers after it was upgraded to 'neutral' from 'reduce' at UBS following its plans to sell its aerospace division and form a joint venture for its detection business.
Retail giant Tesco's group sales, excluding petrol, increased by 9.9% in the six weeks to 6 January 2007. Including petrol, sales increased by 9.5%.
Pub owner Enterprise Inns said it has traded well during the first quarter as it reiterated its plan to buy back yet more shares. "In the absence of material pub acquisitions, the level of returns to our shareholders during the current financial year will be higher than last year," said chairman Hubert Reid.
Burberry has reported a strong third quarter to December with total revenue increased by 25% on an underlying basis.
Fashion chain Ted Baker's sales rose by 11% between 1 November and 24 December compared to the same period a year before. "Gross margins were in line with the levels achieved last year," the trading statement said.
Debenhams, the department store group, warned that the retail market remains challenging with sales down on poor clothing sales.
Northern Foods reports trading conditions remain tough, but results are expected to be in line with its expectations. Revenue growth for the continuing businesses slowed to 2.8% in the third quarter to December and to 3.2% for the year to date.
Shares in Neteller, the Aim-listed money transfer firm, have been temporarily suspended following the detaining of two of its founders and former directors in the US.
Beleaguered charity lottery operator Chariot has warned that if it cannot agree a sale of its assets in the very near future it will be forced to close its Monday lottery game.
FTSE 100 - Risers
Scottish & Southern Energy (SSE) 1,560.00p +2.23%
Smiths Group (SMIN) 1,112.50p +1.64%
Yell Group (YELL) 603.50p +1.26%
BAE Systems (BA.) 430.00p +1.06%
Rolls-Royce (RR.) 491.00p +0.98%
Smith and Nephew (SN.) 548.00p +0.83%
ICAP (IAP) 493.00p +0.82%
Sainsbury (SBRY) 424.50p +0.77%
Astrazeneca (AZN) 2,914.00p +0.62%
GlaxoSmithKline (GSK) 1,388.00p +0.58%
FTSE 100 - Fallers
Antofagasta (ANTO) 449.00p -3.65%
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Tate & Lyle (TATE) 712.50p -3.59%
Lonmin (LMI) 2,857.00p -3.09%
Vedanta Resources (VED) 1,100.00p -2.83%
Cairn Energy (CNE) 1,654.00p -2.82%
Home Retail Group (HOME) 408.25p -2.80%
Xstrata (XTA) 2,265.00p -2.71%
Kazakhmys (KAZ) 1,014.00p -2.69%
BG Group (BG.) 644.00p -2.65%
Persimmon (PSN) 1,408.00p -2.43%
FTSE 250 - Risers
CSR (CSR) 695.50p +6.43%
Hikma Pharmaceuticals (HIK) 379.25p +6.38%
SIG (SHI) 1,112.50p +3.83%
Aquarius Platinum (AQP) 1,204.00p +2.82%
Aga Foodservice (AGA) 404.00p +2.80%
Colt Telecom (COLT) 150.00p +1.87%
Southern Cross Healthcare (SCHE) 357.00p +1.71%
MyTravel Group 'A' Ord (MT.S) 230.25p +1.43%
First Choice (FCD) 290.00p +1.13%
F&C Commercial (FCPT) 137.25p +1.10%
FTSE 250 - Fallers
Debenhams (DEB) 171.00p -6.94%
Burren Energy (BUR) 748.00p -5.26%
Ashmore Group (ASHM) 242.00p -5.10%
Northern Foods (NFDS) 113.00p -5.04%
JKX Oil & Gas (JKX) 260.50p -4.84%
Petrofac Ld (PFC) 370.00p -4.70%
Dana Petroleum (DNX) 1,076.00p -4.27%
HMV Media (HMV) 133.50p -3.96%
Venture Production (VPC) 744.00p -3.63%
Redrow (RDW) 630.00p -3.45%
