US confidence dip hits FTSE

Published on Tuesday 30 June 2009 20:59

LONDON FTSE 100 CLOSE 4,249.21 -44.82

DOWNBEAT economic readings in the US sent London's FTSE 100 Index into negative territory yesterday after a poor final session of the second quarter.

Early falls on Wall Street saw a late session turn for the worse on the Footsie, which closed down more than 1 per cent with a fall of 44.82 points to 4,249.21.

Figures showing an unexpected dip in US consumer confidence sparked the sell-off on both sides of the Atlantic.

There was also bad news on the UK economy, after revised figures revealed a 2.4 per cent slump in first quarter GDP – the worst rate since 1958.

The downward revisions also showed the recession is steeper and longer than first thought, seen as a potential blow to recovery hopes.

The FTSE 100 has rallied from its lows in March, but remains below its opening mark for the year as worries over the pace of economic recovery have caused a stuttering performance in recent weeks.

David Fineberg, head of trading western at CMC Markets, said: "The FTSE may have been eyeing a reasonably solid finish to the quarter but what was earlier looking like a robust – if uninspiring – session has descended into a degree of carnage after the release of some worse-than-expected US consumer confidence figures.

"Once again we've seen the green shoots arguments shot down."

Dampened economic hopes saw miners hit hardest in afternoon trade on the back of sharply lower commodity prices. Randgold Resources led the way, down 127p at 3,924p.

Standard Chartered was also among the heavy fallers, down 35p to 1,140p, bucking the trend seen by rivals such as Barclays, up 3.35p at 283p.

BA was another stock in the red with a 2.8p fall to 124.7p as reports suggested crucial talks with unions aimed at reaching agreement on cost cutting were heading for a breakdown.

But much of the attention was again on the transport sector after Arriva warned revenues from its CrossCountry franchise were under pressure.

Shares fell 4 per cent, or 16p to 406p, but in contrast shares in National Express saw another 2 per cent rise, up 6.75p to 309.5p, after FirstGroup on Monday confirmed its takeover interest in the rail and coach operator.

The housebuilding sector was given a modest lift after the Nationwide said prices rose for the third time in four months during June. This lifted Taylor Wimpey by 0.25p to 33.5p and Barratt Developments by 0.5p to 147.5p.

Carpetright failed to benefit from the better consumer sentiment as the floor coverings firm reported annual results at the bottom of expectations. Shares fell 6 per cent or 37p to 561p after the firm also revealed a sharp cut in its full-year dividend.