FTSE 100 returns to its losing ways
After Wednesday's brief excursion into positive terrain, the FTSE 100 index was back on losing ground on Thursday as banks and miners once again dragged
The FTSE 100 index closed down 27.4 points at 4,252.6—the mid-point of its 77-point trading range, while the FTSE 250 index edged 0.3% higher with a gain of 22.5 points to 7,343.3.
An upbeat start on Wall Street helped pull the FTSE 100 off lows in afternoon deals but a 120-point rally on the Dow Jones Industrial failed to persuade UK investors to part with enough cash to drag the British benchmark index out of the red.
It was a similar story in Europe, where France’s CAC and Germany’s DAX, for example, both recovered some points on the back of Wall Street’s positive start but still shed around 0.7% each.
US indices took their lead from an unexpected upwards revision in the nation’s GDP. The US economy contracted at an annual rate of 5.5% in the first quarter of the year, against the Commerce Department’s previous reading of a 5.7% contraction. This news was tempered to some extent, however, by the number of Americans filing new claims for unemployment benefits last week jumping to a higher-than-expected 627,000.
On this side of the Atlantic, banks were a weight around the FTSE 100’s neck after Asia-focused Standard Chartered issued a cautious outlook and said bad debts at its consumer banking division are rising sharply in the first half of 2009.
Standard Chartered shares shed 2.3%, while HSBC, which is also Asia-facing, lost 2.4% and Lloyds Banking Group and Barclays eased a respective 1.6% and 0.4%.
Royal Bank of Scotland bucked the negative trend, however, thanks in part to a Cazenove upgrade to Outperform. RBS closed among the top gainers, up 3.4%.
Accompanying RBS on the leaderboard was Tullow Oil, which ticked up 2.1% amid speculative interest on the back of the recent round of takeover deals in the oil exploration industry, according to market traders.
But other oil producers were under pressure—heavyweights Royal Dutch Shell and BP slipped 0.9% and 0.2% lower—as were metal extractors. Rio Tinto (down 2.4%), Lonmin (off 2.2%) and BHP Billiton (also off 2.2%) led the mining sector lower.
Another index heavyweight, Vodafone, also attracted sellers after Goldman Sachs removed the stock from its Conviction Buy List and downgraded its recommendation on the mobile phone operator to Neutral. Vodafone shares ended Thursday’s session 1.3% weaker.
To end on a positive, British Airways edged 1.0% higher after chief executive Willie Walsh announced that almost 7,000 staff have agreed to take a voluntary pay cut in order to help the national carrier save up to £10 million. Walsh himself had already said he would work gratis for the month of July.
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