IMF warning plunges Footsie into red

LONDON’S Footsie fell into the red yesterday after a report from the International Monetary Fund (IMF) warned that time was running out to tackle threats to the economic recovery.

The FTSE 100 index closed 1.4 per cent lower, falling 75.3 points to 5,288.41, as the IMF urged political leaders to find a lasting solution to the economic problems in the United States and eurozone.

The Greek debt crisis rumbled on as the cabinet met to discuss speeding up austerity measures required by European finance leaders to release further bailout funds to the beleaguered state.

Ben Critchley, a sales trader at IG Index, said: “After Tuesday’s bumper gains in Europe, the landscape was certainly there to support a bout of opportunistic profit taking and essentially that’s what we’ve seen.”

Banking stocks shrugged off the IMF report and lack of resolution to the Greek sovereign debt woes as Lloyds Banking Group topped the Footsie risers’ board with a climb of 1.9p to 36.1p.

The heavily-weighted mining sector dragged the London market lower after Rio Tinto said customers have asked for deliveries of metals to be delayed – signalling that global economic weakness is hitting demand for commodities. Copper giant Antofagasta hit the bottom of the FTSE 100 index with a fall of 83p to 1,114p, while Rio Tinto lost 148.5p at 3,389p and BHP Billiton shed 76.5p at 1,888.5p.

The pound fell to $1.56 against the dollar and to €1.13 against the euro after minutes from this month’s Bank of England meeting showed members moving closer to enacting further quantitative easing – which would weaken the value of sterling.

Traders also awaited the outcome of the US Federal Reserve’s decision on whether to implement new measures to stimulate America’s economy, which came after the UK market closed.

Grolsch owner SABMiller slid 36p to 2,185p after it upped its takeover bid for rival brewer Foster’s to A$11.5 billion (£7.3bn). The new offer won the backing of the Australian firm’s board, just a week after Foster’s urged its shareholders to reject SAB’s “inadequate” previous offer.

In the FTSE 250 index, a new chairman gave beleaguered travel company Thomas Cook a lift. Frank Meysman – a veteran of Procter & Gamble, Douwe Egberts and Sara Lee – takes over as chairman designate from 1 October and will take over fully in December. Shares in Thomas Cook rose by 0.3p to 41.6p.

Online retailer Ocado slumped by a further 11 per cent or 13.2p to 102.5p on reports Tesco is set to launch a Christmas price war. Ocado matches prices against 7,400 Tesco products and City analysts said the supermarket’s move could hit it hard. Tesco fell 7.15p to 364p.

In other corporate news, shares in JD Sports Fashion were more than 1 per cent lower after it said £700,000 of stock was looted in last month’s riots. Shares fell 10p to 830.5p despite the firm reporting an improved sales trend at the start of its second half-year period.

Among the Scottish stocks, Glasgow-based based gas meter supplier Smart Metering Systems surged 15 per cent or 12.5p to 96p after Monday’s announcement of a doubling in interim pre-tax profits. It floated on the Alternative Investment in July at 60p.