Investors bank profits amid US gloom

BRITAIN'S top share index yesterday posted its steepest one-day decline in six weeks, as investors banked profits amid continuing fears over global economies.

Disappointing US consumer credit figures published late on Wednesday sparked the sell-off and the gloom was further exacerbated by a shock rise in unemployment benefit claims, dampening recovery hopes for the world's largest economy.

The Bank of England's decision to keep interest rates at a record low of 0.5 per cent was widely expected by the market, with the FTSE 100 index ending the day down 49.4 points at 5,712.7.

Andrew Bell, chief executive of the Witan Investment Trust, said: "The Bank of England result has no bearing at all on the fact we are down, it is more we are in a period of consolidation.

"People think we need a pause for breath rather than chasing the market after a 10 per cent rally since a low in February."

Resurgent fears about Greek debts also caused trader nerves, which were only partly soothed by positive comments from the European Central Bank.

Mark Priest, senior equities trader at ETX Capital, said: "Obviously Greece is still on everyone's mind because that hasn't been sorted out, and weak commodity stocks, which obviously have a very big weight on the FTSE, are going to pull the index down."

Phil Gillett, sales trader at IG Index, added: "The sea of red that traders were left looking at earlier has abated a little, but the losers still outnumber the winners seven to one."

The pound, meanwhile, was steady at $1.52 against the dollar and 1.14 against the euro.

Upbeat news from British Airways saw the airline climb to the top of the Footsie risers' board.

BA shares were up 6.8p to 245p – recovering from an earlier 1 per cent fall – after the signing of a long-awaited merger agreement with Spain's Iberia.

The tie-up should be completed by the end of this year and lead to combined annual cost savings of 350 million by the fifth year of the merger.

Meanwhile, EasyJet was another riser, up 3.3p to 473.1p, after the low-cost airline said it carried 3.96 million passengers during March, an increase of 13.5 per cent on a year earlier as passengers switched flights due to the BA cabin crew strike.

Marks & Spencer impressed analysts by reporting a 5.1 per cent rise in like-for-like sales in the fourth quarter of its financial year, although the retailer was helped by the first day of festive sales featuring in the figures.

The company now expects pre-tax profits for the 53 weeks to 3 April of between 680m and 690m, including 60m from an extra week of trading this year and taking into account a bigger than forecast staff bonus.

However, shares were 10.7p lower at 367.5p as City analysts left their profit forecasts unchanged and expressed concern about higher than expected costs.

In the second tier, recruitment firm Hays gained after it reported further signs of improvement in its key trading regions.

In the UK and Ireland, Hays saw "continued stability" after quarter-on-quarter net fees were broadly flat in the three months to the end of March.

Shares responded with a gain of 3p to 115.3p, while rival Michael Page International shed 0.5p to 423.5p ahead of its own trading update this morning.