Profit-taking and weak data sees FTSE lose high
Having hit its highest closing level in 14 months on Monday, the FTSE 100 index paused for breath on Tuesday
As such, the FTSE 100 index shed 36.7 points or 0.7% to settle at 5,345.9, while the FTSE 250 index fell back 122.1 points or 1.3% to 9,401.2. European indices suffered a similar fate under pressure from commodity and banking stocks as investors made the most of their recent sector strength.
“The key will be to see whether today's losses are enough to entice investors back in at cheaper levels or whether they are waiting for prices to go even lower,” commented Joshua Raymond, market strategist at City Index. “If it is just a pause for breath, it may not be too long before investors make their next move.”
US industrial production figures came in significantly below market expectations, rising just 0.1% last month compared to September’s 0.6%, weighed down by a decline in auto manufacturing. A strengthening dollar on the back of Federal Reserve chairman Ben Bernanke’s comments regarding the significant economic challenges that lay ahead saw commodities prices come under the cosh.
In the UK, consumer price inflation data revealed the first rise in the inflation rate in eight months as consumer prices climbed 1.5% year-on-year in October, as had been broadly predicted.
A range of financial sector players and commodity issues featured on the blue-chip casualty list by close of play Tuesday. Fund manager Man Group, banking group Barclays, platinum producer Lonmin and diversified miner Rio Tinto each lost between 2.2% and 4.2%.
Real estate investment trust British Land led a number of property stocks lower as investors took the firm’s first increase in net asset value since 2007 as an opportunity to lock in profits. British Land and peers Land Securities and Liberty International had all enjoyed a strong run up to the former’s quarterly results today, but had each slipped 1.0%-2.7% by the end of the day. Land Securities will publish its own results later this week. British Land, which suffered the most of the three, this morning reported a 3.1% increase in its NAV to 372p per share.
On the flipside, ICAP topped the leaderboard with a gain of 3.2% as the market cheered better-than-expected first half results and an interim dividend hike. The interdealer broker’s results announcement prompted a number of upbeat analyst comments, including a recommendation upgrade from Numis Securities to Hold from Reduce.
Cable & Wireless was another winner, 1.7% firmer, as investors digested its fundraising plans that will facilitate the spin off of its UK division. C&W intends to raise £200 million via a convertible bond offering ahead of its plans to split the company into two by the end of 2010.
Elsewhere, stocks oft favoured for their defensive qualities attracted buyers, with utility providers Scottish & Southern Energy and Centrica rising 1.9%-2.0% each and consumer products manufacturers Diageo and Cadbury each climbing 0.8%-1.3%.
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