One hint from the Fed was all it took to send markets back into the topsy-turvy world where good news is bad and vice versa.
The FTSE 100 closed down 15.34 points at 6,810.6, and even that was after a late recovery from lower levels, as traders reacted to comments from the US Federal Reserve to the effect that, yes, they will have top up interest rates at some point as the economy recovers.
Tony Cross, market analyst at Trustnet Direct, said: “You would think that the prospect of a strong economic performance from the powerhouse of the global economy would be music to investors’ ears, but the enduring recovery in the US seems to be striking a bum note with equity investors: rising interest rates erodes some of the yield attraction currently enjoyed by equity markets.”
Oil giant Royal Dutch Shell dragged on London’s top-flight after annual results came in below City expectations.
Shell’s disappointing performance in the final quarter of 2014 triggered a sell-off across the heavily-weighted sector, with BP also lower.
Shell was down around 5 per cent or 110p at 2,138p. The disappointing profits figure impacted on BP, which was down 8.1p to 424.8p ahead of its own results next week. Tullow Oil fell 6.1p to 350.9p.
In other corporate results, drinks giant Diageo rose 3 per cent or 60.5p to 2,022.5p amid relief over its first half results performance, even though profits dropped 18 per cent.
Analysts were encouraged by signs of momentum after the second part of the half year numbers showed some improvement. Other consumer goods firms benefited as Unilever rose 55p to 2,952p and Reckitt Benckiser lifted 100p to 5,720p.
Low-cost airline EasyJet set the pace in the FTSE 100, rising by more than 6 per cent or 109p to 1,876p after analysts at Barclays upgraded the stock in the wake of upbeat trading figures earlier in the week.