Footsie fights back as markets shake

LONDON FTSE 100 CLOSE 5,586.61 -16.91

GAINS from commodities companies yesterday helped to offset losses elsewhere on the market as London was struck by more tremors caused by the continuing uncertainty over Greece's debt crisis.

The FTSE 100 index clawed back losses of more than 60 points at one stage to end the day 16.91 points lower at 5,586.61.

Markets have been sent into turmoil after ratings agency Standard & Poor's slashed Greece's sovereign debt to junk status on Tuesday.

S&P's also sparked concerns over contagion by downgrading Portugal due to the "amplified risk" faced by its own economy – and cut its rating on Spain just before the market closed.

Investors are worried that German demands for strict conditions will prevent Greece from getting the money it needs to avoid defaulting on its debts.

America's Dow Jones Industrial Average lifted slightly in early choppy trading amid strong earnings figures and ahead of the latest decision from the Federal Reserve, which is expected to hold a key interest rate at historic lows.

Europe's markets remained firmly in the red, with the Dax in Germany down 1.2 per cent and France's Cac 40 off 1.5 per cent.

Fears over the stability of the eurozone have put the single currency under strain in the last few days, while investors have sought a safe haven in the dollar. The pound has also been hit in the market uncertainty – falling to 1.15 and $1.51.

Financial stocks came under more pressure amid worries over their exposure to Greek sovereign debt, with Royal Bank of Scotland off 1.05p to 54.95p, Lloyds Banking Group 1p lower at 67.17p and Barclays 5.2p cheaper at 352p.

Engineering giant Rolls-Royce was also down 14p to 576p after a trading update that said first half sales and profits would be flat compared with 2009. The group said the Iceland volcano disruption had put additional pressure on its European aviation customers.

Meanwhile a number of top-flight stocks turned ex-dividend, meaning shareholders do not qualify for the latest pay-out. Publisher Reed Elsevier and Scottish Gas owner Centrica were two of the biggest fallers, losing 21p to 509p and 15p to 296.2p respectively.

Meanwhile, Home Retail Group – which owns Argos and Homebase – was down 3.9p, or 1.2 per cent, to 277.1p amid worries from brokers at Arden Partners over increased competition from Wal-Mart's Asda as well as other electrical retailers.

In corporate news, Shell announced a 49 per cent surge in first-quarter profits, to $4.9 billion (3.2bn). The firm, along with rival BP, has benefited from higher oil prices. Shell shares rose 47.5p to 1,969.5p, while BP added 15p to 625p.

Among the Scottish stocks, Stirling-based insulation maker Superglass closed down 3p at 27.5p despite an upbeat outlook for 2011 accompanying the firm's interim results, with investors focussing instead on the company's more cautious comments for the second half of the year.

SpaceandPeople, the Glasgow-based firm that places advertisers into shopping centres, also shed 3p to end the day at 70p after unveiling a plan to buy London-based rival Retail Profile in a 6.3 million deal.