London close: Rate fears sap buyers' strength
London closed lower as interest rate concerns ahead of this week's announcements in the UK and Europe and strong economic data in the US prompted a spurt of selling.
US Federal reserve chairman Ben Bernanke said the US economy will grow despite a housing slump that is likely to remain for longer than originally anticipated, while the ISM services index came in much stronger than expected, sending US shares sharply lower.
Miners rallied on hopes that demand for metals from the US will now hold up, with BHP Billiton leading the way. Antofagasta also perked up late on.
United Utilities was the best performer on its decision to sell its electricity distribution assets and return the proceeds to shareholders. Underlying profits came in at £561m in the year to March, up from £484m.
Insurer Standard Life was another riser as Merrill Lynch upped its stance on the shares to 'buy' from 'neutral', while Old Mutual also benefited from a Merrill upgrade.
JP Morgan started coverage of Associated British Foods with 'overweight' advice and 1,160p price target, sending the Twinings tea maker higher.
Royal Bank of Scotland edged ahead after the bank said a better bad debt position than expected will mean interim earnings coming in slightly higher than forecasts. But the market only wants to hear what it is happening with ABN Amro at present. RBS added later that it is not in talks with Bank of America over the futures of LaSalle Bank.
A flurry in Vodafone early on talk of a break-up move quickly dissipated with traders not reporting any substance behind the story.
Daily Mail & General Trust took a tumble after Morgan Stanley lowered its view on the newspaper publisher to 'equal-weight' from 'overweight' on valuation grounds.
Away from Footsie, Carphone Warehouse's underlying annual profits came in ahead of forecasts at £123m, down from £136.1m. Connections rose by 17% to 4m and the group is aiming for 15% growth in subscription connections this year. Sales rose 31% to £3.99bn with pre-tax profits down from £81m to £68.4m.
Contractor Balfour Beatty has won a $1.1bn of contracts including a project to design and build a new Federal Correctional Institution at Berlin, New Hampshire in the US.
Mezzanine finance specialist Intermediate Capital is the worst performer on the FTSE 350. It posted a record full year profit this morning, but dampened hopes of a repetition next year with a warning that growth is likely to slow.
Ryanair and easyJet came under pressure as the Irish no-frills airline gave warning of a fierce fight in prospect as airlines struggle for customers in the months ahead.
Plastics specialist Victrex is another under pressure after it flagged a softening in demand from semiconductor manufacturers alongside record profits.
Volatile markets have seen revenues at spread betting group IG Group surge in the second half of the year though margins remain below last year.
Among the minnows Phytopharm and Torotrak are both showing good gains. Drug developer Phytopharm reported encouraging test results for its Parkinson's treatment Cogane, while Torotrak and manufacturing company Xtrac have entered into a licence agreement.
FTSE 100 - Risers
United Utilities (UU.) 796.00p +3.04%
Johnson Matthey (JMAT) 1,682.00p +1.94%
BHP Billiton (BLT) 1,282.00p +1.67%
Drax (DRX) 786.50p +1.35%
Kazakhmys (KAZ) 1,315.00p +1.15%
(Article continues below)Advertisement
Antofagasta (ANTO) 579.50p +1.05%
FTSE 100 - Fallers
InterContinental Hotels Group (IHG) 1,370.00p -3.04%
Persimmon (PSN) 1,319.00p -2.58%
Enterprise Inns (ETI) 720.50p -2.44%
SEGRO (SGRO) 700.00p -2.37%
Next (NXT) 2,194.00p -2.32%
Kingfisher (KGF) 245.00p -2.20%
FTSE 250 - Risers
Carphone Warehouse (CPW) 322.00p +6.10%
St James's Place (STJ) 457.25p +4.75%
Southern Cross Healthcare (SCHE) 553.50p +3.65%
WH Smith (SMWH) 440.00p +3.41%
BSS Group (BTSM) 512.50p +2.96%
John Wood Group (WG.) 319.25p +2.49%
FTSE 250 - Fallers
Intermediate Capital Group (ICP) 1,738.00p -8.53%
easyJet (EZJ) 525.00p -6.75%
Victrex (VCT) 762.00p -5.93%
Helical Bar (HLCL) 437.00p -4.38%
IG Group Holdings (IGG) 316.75p -4.02%
Wimpey (George) (WMPY) 599.00p -3.23%
