Markets: Insurers hit by competition threat

By DOMINIC JEFF
Published on 31/05/2012 23:22

CLOSE 5306.95 +9.67

Insurance stocks took a knock earlier today after the Office of Fair Trading said it planned to refer the “dysfunctional” car insurance market to the Competition Commission.

Admiral was one of the biggest top-flight fallers, down 80p to 1,039p. But RBS, which is currently trying to dispose of its Direct Line insurance business, was down only fractionally at 19.98p.

The wider market had staged a cautious rebound rally in the morning session but a raft of worse-than-expected economic figures from the US snuffed out most of the gains. US GDP, employment figures and the latest Chicago PMI all fell short of forecasts, an unholy trinity that sent markets reeling once again.

Chris Beauchamp, market analyst at IG Index, said it had been a turnaround day. “What we really didn’t need was for US figures to come in below expectations,” he said.

The Footsie closed 9.6 points ahead at 5,306.9 after US gross domestic product growth for the first quarter was downgraded to an annualised 1.9 per cent, from 2.2 per cent.

Broadcaster ITV plunged 6 per cent amid fears that advertising markets will be weaker over the summer, with reports that some TV campaigns for July and August could be cancelled. Shares dropped 4.4p to 72.9p.

Shareholders of Plus Markets received mixed news after trading closed, as a rival offer for the junior stock exchange apparently emerged from Gulf Merchant Bank (GMB). The value of Plus has collapsed in recent months after it decided to the exchange for nominal sum. GMB said yesterday evening that it was making a better offer, but a spokesman for Plus said it “lacked all credibility”.

NEW YORK: Wall Street fell tonight as the benchmark S&P 500 index ended the worst monthly performance since September, marked by worries over Europe’s mounting credit problems.

The Dow Jones industrial average was down 26.41 points, or 0.21 per cent, to close at 12,393.45 while the broader Standard & Poor’s 500 Index closed down 3.00 points, or 0.23 per cent, at 1,310.32. The Nasdaq Composite Index fell 10.02 points, or 0.35 per cent, finishing at 2,827.34.

For the month, the Dow fell 6.2 per cent, the S&P 500 lost 6.3 per cent and the Nasdaq fell 7.2 per cent.