Wall Street halts Footsie's rebound

Published on Wednesday 28 July 2010 22:42

LONDON FTSE 100 CLOSE 5,313.95 -5.73

SHARES in London failed to hold on to gains yesterday as losses on Wall Street wiped out early progress.

Initial optimism over the world economy helped the FTSE 100 index to gain more than 30 points at one stage, but sentiment soon switched after trading opened across the pond.

Despite a busy day for UK corporate news, the Footsie finished 5.73 points lower at 5,313.95, dragged lower as the Dow Jones Industrial Average fell more than 60 points in early trading.

Nervousness surrounding today's second-quarter US economic growth figures hit the Dow hard, while the index was also weighed down by mixed earnings from the likes of consumer giant Colgate-Palmolive.

Michael Hewson, analyst at CMC Markets, said: "The consensus appears to be for a 2.5 per cent rise (in US GDP], however, given how poor recent US economic data has been, it will be a surprise if we get anywhere close to that figure."

After a recent strong rally, the pound eased back a little, slipping just below $1.56 and down to €1.19.

Better-than-expected results from publisher Reed Elsevier, drugs maker AstraZeneca and engineer Rolls-Royce provided much of the focus among Footsie stocks.

Reed led the market higher with a 4 per cent or 20p gain to 552p as it noted an improved trading performance and stabilising advertising markets.

AstraZeneca followed close behind after lifting its full-year earnings guidance and gaining a boost for heart drug Brilinta from US regulators. Shares cheered 86.5p to 3,289p.

Meanwhile defence giant BAE Systems added 3.1p to 320.1p as it said it expected to maintain growth this year despite pressure on the budgets of its major customers.

Elsewhere in the sector, Rolls-Royce said it expected "modestly higher" annual results, driven by a strong performance at its marine business, although it failed to maintain earlier advances, closing 2p lower at 585.5p.

Oil giant Shell added 6p to 1,713p as the UK-Dutch group lifted profits 34 per cent after a strong second quarter and faster-than-expected progress on cost-cutting plans.

The leading Footsie faller was aluminium drinks can maker Rexam, after Credit Suisse brokers cut their rating on the firm, leaving shares 11.1p or 3 per cent lower at 316.5p.

Shares in satellite broadcaster BSkyB were 9p down at 711p despite a 10 per cent rise in operating profits to 855 million and 90,000 new customers in the final quarter of its financial year.

In the FTSE 250, shares in troubled social housing firm Connaught jumped almost 15 per cent, or 4.5p to 35.5p, as the company said it had arranged a 15m short-term overdraft facility from lenders to ease immediate funding concerns.

Another strong gainer in the second tier was gaming group Rank, which posted its own double-digit gains after reporting the first growth in customer visits to its Mecca Bingo halls in more than a decade. Shares cheered 7.8p to 117p.

Both firms were surpassed by PartyGaming, up 20 per cent or 52.5p to 309.5p as the firm announced a merger with bwin to create the world's largest online gaming business.