Markets: Transatlantic drift hampers FTSE

More disappointing economic data from the US - coupled with a sovereign debt downgrade for Ireland - kept markets on a downward trajectory yesterday as investors remained concerned by the pace of the global economic recovery.

The FTSE 100 index struggled to keep above the 5,100 mark and closed 46.55 points down at 5,109.4, after the US commerce department said durable goods orders only rose 0.3 per cent last month, much worse than the 2.8 per cent growth forecast.

On the other side of the Atlantic, Wall Street's Dow Jones Industrial Average fell in early trading, having dipped below 10,000 for the first time since early July on Monday.

Investors' confidence has been shaken by a string of troubling updates on the US economy, including dismal home sales figures on Tuesday.

The world's biggest economy will be further tested later this week with the release of figures on consumer confidence and revised second-quarter GDP, as well as the latest speech on the state of the economic recovery from Federal Reserve chairman Ben Bernanke.

The mood in Japan was also uncertain after figures yesterday showed the country's exporters were feeling the pinch after demand from overseas customers slowed for the fifth consecutive month in July. The Nikkei 225 fell almost 2 per cent overnight.

The poor economic figures from the US saw the pound rise against the dollar to $1.54. The pound was also up against the euro at €1.22.

Michael Hewson, analyst at CMC Markets, said: "The downgrade of Ireland by Standard and Poor's really set the tone for the day, with banks and commodity stocks, as usual, bearing the brunt of the damage, as fears about the outlook for the global economy continue to weigh down on sentiment."

The fallers board in London featured a number of resources-based stocks as investors continued their flight from risk.

Tullow Oil closed 59p down to 1,238p after a lacklustre reception to first-half results while Antofagasta fell 34.5p to 977.5p and BP extended the losses seen in recent days with a decline of 2.4p to 375.2p.

Stocks on the way up included some of those with half-year results out yesterday.

The biggest rise in the FTSE 100 index came from support services firm Serco after its adjusted profits improved 19 per cent to 110.2 million and it said it stood to benefit as many government and commercial customers looked to reduce costs.

The figures were in line with expectations and caused the company's shares to rise 27p to 586.5p, a gain of 5 per cent.

Car insurer Admiral Group was another blue-chip riser, after it reported a 21 per cent rise in pre-tax profits to 126.9m in the first six months of the year.

The interim figures were better than expected and resulted in shares rising 3 per cent or 39p, to 1,512p.,

Glasgow-based temporary power firm Aggreko was not so fortunate as it sunk to the bottom of the London market, fading 83p to 1,346p.

The stock, which has risen sharply in the past year, was under pressure despite posting a 50 per cent hike in its dividend and forecasting higher than expected profits.