ROBUST telecoms and oil stocks helped leading shares to close higher yesterday, but it could not stop the FTSE 100 index finishing off 0.5 per cent on the week.
As poor US data revived concerns about the strength of the global economic recovery, the Footsie closed up 16.3 points at 4,347.6.
Dealers said sentiment was partly hit by the University of Michigan’s preliminary consumer sentiment reading. This index dropped to 89.6 in December, below forecasts for a reading of 96.0 and November’s final figure.
"It’s not a great way to finish the week," one trader said. "You don’t want that kind of number at this time of year, when the consumer is supposed to be jumping through hoops."
Alex Scott, of Seven Investment Management, commented: "Whilst optimism remains intact for the global economy, investors will be happy with these sorts of multiples and will be looking for earnings growth to take markets to the next stage.
"What I think is still unproven is how sustainable that growth is in the face of the headwinds of debt and already quite high surplus capacity in most Western economies."
Drug giant AstraZeneca also put a damper on the market, falling 1.7 per cent or 45p to 2,570p after a US appeal court upheld the right of German rival Schwarz Pharma to sell a copycat form of AstraZeneca’s Prilosec ulcer pill.
Corporate news in London did little to stir buying interest, with only Bradford & Bingley among blue-chip companies to make an announcement.
The former building society said it was on course to meet annual profits expectations and added it had secured a fresh deal with the lending arm of General Motors to buy a mortgage book worth 1.4 billion.
B&B shares initially rose, but later closed unchanged at 300.5p - despite providing impetus to rival mortgage-based banks Abbey, up 1.75p to 527.75p, and HBOS, ahead 7.5p at 707.5p.
Others risers in the banking sector included Alliance & Leicester, ahead 10p at 884p, and Royal Bank of Scotland - 13p stronger at 1,602p.
Insurers had earlier profited from the strong start, although only Prudential - 6.75p higher at 462.75p - completed the session with a significant improvement.
Telecoms stocks managed to hold on to gains with Vodafone 1.5p stronger at 136.75p, BT Group ahead 1.5p at 176p and mmO2 up 1.75p at 78.75p. Colt Telecom was 2p firmer at 98p
Oil majors BP and Shell rose 5.5p and 1.5p to 434p and 389.5p respectively, helped by a jump in NYMEX crude futures.
But brewer Scottish & Newcastle lost some of its froth, falling a quarter of a penny to 361.25p as it confirmed it was considering a move to establish a foothold in the fast-growing Chinese beer market.
Outside the top flight, tour operator MyTravel rose another 15 per cent as investors continued to hope Thursday’s news of its 911 million loss marked the low point of its troubles. The shares, which closed up 33 per on Thursday, rose 1.75p to 13.75p.
Rail and bus operator Arriva was another stock to weaken as the session wore on, losing hold of a 4p gain achieved after it had said that all of its divisions were trading at, or above, expectations. Shares closed 0.25p higher at 380.25p.
It proved to be a tough session for fire engines-to-quarrying group Johnston, which saw its share price slump 18 per cent or 56.5p to 265p after it warned of disappointing full-year results.
And textiles manufacturer Sirdar slumped 29 per cent or 20.5p to 50p following its guidance that profits for the year ending June 2004 would be short of current expectations.
In the media sector, shares in Reuters, the world’s largest listed provider of news and data to financial markets, were up 2.4 per cent at 239.5p, ending a recent losing streak, after a senior executive spoke of an improving sales trend.
Devin Wenig, an executive director, had told a New York media conference on Thursday that cost savings were on track.
Shares in separately listed subsidiary Instinet Group Inc, an electronic trading network, have also rallied over the past few days.
Rentokil, which kits out washrooms and provides pest-control services to the Queen, slipped 2.7 per cent or 5p to 188.75p, making it the biggest FTSE 100 faller.
The shares have been on a steady downward path since Rentokil said earlier this month that demand had slowed for its washroom services division.
"Operationally, we still think Rentokil will struggle to deliver significant improvement in performance near term," said ABN Amro analyst Jamie Brandwood, who sees a valuation floor for the stock of 155-172p.
BRITISH-Dutch publisher Reed Elsevier fell 2.3 per cent or 10.5p to 449p after a House of Commons committee said that it would hold hearings on the price and availability of scientific journals.
The committee will specifically look into the emergence of free, open-access publications, which could challenge Reed’s scientific and legal journals.
Morgan Stanley recently cut its target for Reed from 600p to 550p.
It has cut its 2004 earnings per share forecast by 4 per cent, and 9 per cent after exceptional charges.