Markets: Dip fails to dent December hopes

LONDON FTSE 100 CLOSE 5,188.43 -6.74

LONDON'S Footsie sank back below the 6,000-mark yesterday as thin trading volumes and a lack of economic news conspired to rob the index of any meaningful direction.

Yet the FTSE 100 index remains on track to record one of the best December performances in its history, thanks to a pre-Christmas "Santa rally" boost.

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The index has gained 25 per cent since it touched the year's low at the start of July and is up about 10.8 per cent since the start of the year.

A pre-Christmas rally means the Footsie remains on track for its strongest December since 1987.

It is up 8.5 per cent so far this month, albeit in wafer-thin volume, with less than half of the average daily volume of the last 90 trading days.

But the FTSE 100 ended yesterday down 12.56 points, or 0.2 per cent, at 5,996.36, having closed at a fresh 30-month high on Friday and above 6,000 for the first time since 3 June, 2008.

The FTSE 250 index enjoyed a better day, rising 136.01 points or 1.2 per cent to close at 11,628.89.

The second tier is often seen as a better reflection of the state of the UK's economy as more of its constituents derive their income from the home market than the overseas-focused FTSE 100. Angus Campbell, head of sales at Capital Spreads, said: "People are still buying stock around these levels as the spectre of a double-dip (recession] has gone away, and we are likely to see the levels maintained in 2011."

London-listed shares were trading for the first time since Christmas and to some extent caught up with the decline on mainland Europe earlier in the week, partly due to China's move to raise interest rates on Christmas Day.

Banks were among those responsible for pulling the Footsie back below the 6,000 level. Part-nationalised Royal Bank of Scotland was the biggest faller after it dropped 0.9p to 39.8p.

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Taxpayer-backed counterpart Lloyds Banking Group was not far behind, down 1.2p to 67.6p.

Retail giant Next was also one of the biggest fallers off 2 per cent or 41p at 2,006p.

Miners were among the top-performing companies, helped by excitement over metal prices after gold saw its largest one-day gain since early November on Tuesday.

Gold miners African Barrick Gold and Randgold Resources led the sector's rebound, up 36.5p to 618.5p and 180p to 5,445p respectively.

Rio Tinto remained in negative territory, down 20.5p to 4,552.5p, as it revealed Australia's heaviest rainfall for decades had affected production at four of its mines in the country.

Oil prices remained near a 26-month high above $91 a barrel helped energy giant Shell make gains. Shell lifted more than 1 per cent, or 23.5p to 2,140p.

In the FTSE 250, Superdry fashion firm SuperGroup edged higher as it recovers from recent weakness.Shares rose 3 per cent, up 40p to 1,272p.

Elsewhere, oil explorer Desire Petroleum delivered some more bad news over its Falklands operations.

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Shares plunged by 29 per cent or 17.8p to 42.5p after the company said it did not find any oil or gas at an exploration well near the Falkland Islands, but will keep drilling to check out a deeper prospect.