Footsie creeps up in minimal trade

THE Footsie edged higher yesterday as traders sat on the sidelines, expecting an interest rate hike in China this weekend.

Leading stocks fluctuated throughout the session as trading volumes remained low but the benchmark FTSE 100 index managed to close 4.99 points ahead at 5,812.95.

Manoj Ladwa, senior trader at ETX Capital, said: "The FTSE 100 has spent the entire session trading back and forth between positive and negative territory as traders mulled over their next move. With a lack of corporate and economic announcements and derisory volume, traders had little to get excited over."

Encouraging economic signs in the US failed to inspire investors, despite data revealing the trade deficit falling to its lowest level in nine months in October.

The rate of inflation in China is expected to lift to well above 4.5 per cent this weekend, making an increase in interest rates likely, just a month after the central bank's last rate hike.

Tightening monetary policy could hit Chinese demand for overseas goods - which has been one of the drivers of the global economic recovery.

The pound was up against the euro at €1.19 and the dollar at $1.58 after producer prices output data came in just below 4 per cent for November, indicating that inflationary pressures still remain a factor in the UK.

Tough new rules approved by European regulators clamping down on banker bonuses were in sharp focus and led to a drop in banking stocks.

Barclays fell 3.8p to 272.2p and part-nationalised Royal Bank of Scotland dropped 0.6p to 41.7p.

Asia-focused bank Standard Chartered also continued its descent on fresh concerns about issues flagged up in its trading update.

Investors were left unsettled on Thursday by its admission that costs were rising faster than revenues, and the share fall was compounded yesterday when broker Bank of America Merrill Lynch lowered its rating on the bank. Shares in the group fell 47.5p to 1,762.5p.

BP was among a number of commodity companies seeing falls, down 0.4p to 455p.

Primark parent Associated British Foods dropped 14p to 1,091p after giving a cautious outlook for the consumer environment in a trading update, despite confirming that it is aiming for annual revenue and profit growth.

Rolls-Royce fell after a newspaper report suggested the group could face costs of $500 million (380m) in redesigns and fall-out from its recent Trent 900 engine crisis. The company's shares pulled back from hefty early session declines, but were still stood down 3p at 639p.

In the FTSE 250, Rentokil Initial was in the spotlight after it said woes continued at its troubled City Link delivery arm and confirmed the division's chief, Stuart Godman, had quit. Its shares fell early trade, but clawed back to stand 1.9p higher at 96.9p.

Among, Scottish stocks, shares in oil and gas services giant Wood Group rose by 2.2p to end the day at 488.2p after the company's gas turbine division won a contract from American conglomerate General Electric.

The Aberdeen-based company is due to issue a pre-close update next week ahead of full-year results in March.