Footsie slips as quake rattles nerves

LONDON'S Footsie index slumped into the red yesterday after a second large earthquake to strike Japan within a month knocked investor confidence, with traders wary of further losses once Asian markets open.

The FTSE 100, which fell more than 4 per cent after March's earthquake in Japan, closed down 33.76 points or almost 0.6 per cent at 6,007.37.

One London-based trader said: "Investors have fled risk immediately and it will be interesting to see how Asian markets react overnight as more news filters through, that could have a large bearing on how we open."

Risk-sensitive miners and heavweight oil producers were the biggest weights on the index, while the biggest FTSE 100 index riser was Glasgow-based temporary power supplier Aggreko, which offered its services to Japan following March's quake. The stock closed up 1.3 per cent or 22p at 1,696p.

Vedanta Resources and Edinburgh-based Cairn Energy fell 2.6 per cent and 2.3 per cent respectively after they extended the deadline for a $9.6 billion (5.9bn) acquisition of Cairn's Indian assets, a day after the Indian government deferred a decision on the deal.

Analysts at Collins Stewart said: "Although clearly a disappointment and likely to result in some further weakness, the deal is not yet dead."

Vedanta closed down 66p at 2,431p while Cairn was 10.5p lower at 445.9p.

Equity markets were largely unmoved by the Bank of England's decision to leave its base rate at a record low of 0.5 per cent for the 25th month in a row and the European Central Bank's widely expected move to hike rates to 1.25 per cent from their record low of 1 per cent.

But the announcements did move the currency markets, as the euro followed the pound downwards after the ECB gave no indication that a second rates hike was imminent.

The pound was up against the single currency at €1.14 but was down against the greenback at $1.63.

Retailers, which on Wednesday staged a mini-recovery following a better-than-expected update from Marks & Spencer, were forced back by more gloomy news.

Halfords lowered its profit range for the year to between 124 million and 127m, down from 127m to 135m, while Carpetright said profits for the year to 30 April were likely to be no better than the level achieved in the 2008-9 financial year.

Shares in FTSE 250 Index-listed Halfords dropped nearly 6 per cent, or 21.5p to 347.1p, while Carpetright fell 38p to 633.5p.

In the top-tier, Next dropped 44p to 2,052p, Kingfisher pulled back 5.5p to 259.4p and Marks & Spencer was down 3.7p at 356.9p.

Portugal's request for financial assistance failed to have much impact as banking stocks provided some support to the market.

The banks were lifted as it appeared the impact of the UK's tougher capital regime may no longer be such a disadvantage after two European banks announced plans to raise 11.5bn of fresh capital.

Royal Bank of Scotland rose 0.1p to 42.9p, HSBC was ahead 6.8p at 667.2p, while Barclays improved 0.5p to 295.3p. Lloyds Banking Group bucked the trend, down 0.1p at 61.86p.