Markets: Eurozone fears add to UK’s troubles

FRESH worries about the eurozone debt crisis and fears over the strength of the UK’s economic recovery meant the Footsie struggled to make significant gains yesterday.

A shock fall in UK manufacturing output for February flew in the face of this week’s up-beat economic reports and spooked investors.

Sentiment was also dented by borrowing costs rising for France, Italy and Spain as nervousness about the strength of the eurozone economy gripped the markets. But a late-afternoon rally ahead of the Easter break allowed the FTSE 100 index to close up 19.9 points at 5,723.67, boosted by news that unemployment claims in the United States hit a four-year low.

Will Hedden, a sales trader at IG Index, said: “It was a calmer finish to the day after Wednesday’s sell-off, although we have still seen some intraday volatility in the UK market.”

The heavily-weighted mining sector helped to drag the Footsie back into positive territory after commodity prices recovered following Wednesday’s hefty falls.

Glencore closed 22p higher at 412p, while Polymetal rose 37p to 932p and Xstrata added 38p to end the day at 1,112p.

British banking stocks were under pressure amid a wider sell off across European markets.

Lloyds was down 0.5p at 31.4p, Royal Bank of Scotland fell 0.3p to 25.8p and HSBC was 2.3p lower at 554.5p.

Shares in satellite television broadcaster BSkyB dropped 3.4 per cent – down 22.5p at 635.5p – making it the biggest faller in the FTSE 100 after the company admitted that senior executives had authorised journalists to hack into email accounts.

Energy services firm Petrofac headed in the opposite direction – up 57p or 3.4 per cent at 1,755p – after the Share Centre selected the stock as its “share of the week”.