US data drags FTSE 100 back from 2009 high
Leading shares hit a new 2009 high during Friday's session but disappointing US consumer data dragged the blue-chip index into the red by close of play
The FTSE 100 index slipped 41.5 points to close 0.9% lower at 4,714.0, while the FTSE 250 index took on 32.2 points or 0.4% to settle at 8,515.8.
The cause of Wall Street’s fall, and the subsequent loss of momentum in the UK and European markets, was the August reading of the University of Michigan survey of consumers, which dropped to 63.2 this month from 66.0 in July—considerably lower than the expected increase to 68.5 that economists had forecast.
In other data, US industrial production increased more than expected and consumer prices offered reassurance over the emergence of inflation, but neither of these measures were enough to overshadow the change in consumer sentiment.
In the UK, miners had helped keep the FTSE 100 index’s head above water in morning deals but by market close had succumbed to profit-taking, with Eurasian Natural Resources leading the blue-chip losers, down 5.6%, following a management shake-up. Sir David Cooksey is to step down as chairman next week and Felix Vulis is to be promoted to chief executive officer.
British banks also dragged: HSBC, Standard Chartered, Royal Bank of Scotland and Barclays were all under the cosh—the former had shed 2.8% by close of play. The story was much the same when it came to insurers. Prudential gave back some of the previous session’s gains, 2.6% lower, tracked by peers Standard Life and Aviva, each of which fell back a respective 2.4% and 2.1%.
Helping to limit index losses, however, was the UK’s real estate industry. British Land was the stand-out performer with a gain of 3.9% amid market talk a sovereign wealth fund could be building a stake as it warms up to making a possible bid for the real estate investment trust (REIT).
“If the rumours are true, this demonstrates renewed confidence in the badly beaten sector and may be enough to spark a revival of confidence in broader housing related shares,” City Index market strategist Joshua Raymond commented.
The rumour mill not only fuelled shares in British Land but also attracted buyers to other sector plays, pushing Hammerson and Liberty International up 1.7% apiece.
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