Monday market close: Cautious start to eventful week

Markets gave back cautious early gains as investors braced themselves for an eventful week that will see the US Federal Reserve take a key decision on whether to hike interest rates.

Traders await Thursday's rates decision from the US Fed

The FTSE 100 Index initially made up some of the ground lost in Friday’s negative session, but ended the day down 33.17 points at 6,084.59.

Many observers believe the turbulence over China’s slowing economy could prompt the Fed to postpone a rate rise, and IG analyst David Madden said the market would be “surprised” by an increase in borrowing costs after Thursday’s meeting.

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He added: “The Fed will most likely issue a warning that rates will not stay ultra-low forever – this is something we have heard on numerous occasions but still nothing has changed.”

On a quiet day for corporate news, retailers were under pressure amid the latest signs of tough times for the sector, with the British Retail Consortium reporting the sharpest drop in footfall for nine months in August.

Embattled supermarket chain Morrisons led the blue-chip fallers, dropping 4.5 per cent or 7.4p to 157.8p, while market leader Tesco lost 2.9p to 178.45p and Sainsbury’s closed down 3.8p at 226.9. Elsewhere on the high street, Next fell 95p to 7,645p while Marks & Spencer ended the session 12.2p or 2.4 per cent lower at 492.8p.

Meanwhile, Daily Record owner Trinity Mirror was in focus after it confirmed it was in talks over a takeover of local newspaper group Local World in a reported £200 million deal. Shares jumped 6 per cent or 8.25p to 147.25p.

Newspaper distributor John Menzies unveiled a tie-up with wnDirect to boost its presence in the online parcels arena, but shares in the Edinburgh-based group dipped 4.25p to 404.5p.