Strauss-Kahn fallout hits FTSE hopes

LONDON FTSE 100 CLOSE 5,923.69 -2.18

THE Footsie failed to make headway yesterday after fears over the eurozone debt crisis offset gains from resurgent miners.

The market slumped 1 per cent in early trading after being dogged by concerns that the arrest of International Monetary Fund (IMF) chief Dominique Strauss-Kahn on sex assault charges threatened to weaken the organisation's ability to resolve the Greek debt crisis.

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But the top flight index pulled back earlier losses to finish down just 2.18 points at 5,923.69 after mining stocks rebounded amid more volatility in the commodities market.

The US market lifted the blue chip index upwards after it made gains despite the headline reading in the Federal Reserve Bank of New York's Empire State Manufacturing Survey coming in well below expectations.

The pound was up to $1.62 against the dollar as the weak US manufacturing data caused the greenback to fall. But sterling was down at €1.14 against the euro after the highest eurozone inflation for 30 months raised the prospect of another interest rate hike by the European Central Bank.

Yusuf Heusen, senior sales trader, IG Index, said: "It does feel as if UK investors are even more dependent on US markets for direction at the moment.

"With the Dow Jones back to levels not seen for a couple of weeks, there is a distinct lack of momentum across the board."

Miners dominated the risers' board after investors were urged to take advantage of a recent sell-off in the sector. Antofagasta was the top riser, up 43p to 1,185p, after an upgrade from Citigroup. Kazakhmys was up 29p at 1,242p and BHP Billiton was ahead 52p at 2,392p.

Software group Autonomy was also near the top of a shortened risers' board after the company said it had agreed to buy assets from American information management firm Iron Mountain for $380 million (234m). Shares were up 46p at 1,780p

But the retail sector came under the spotlight following speculation that under-pressure Kesa Electricals was considering a move to sell its UK arm Comet and de-list from the London stock exchange.

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Kesa shares were 9.7p higher at 150.7p, while rival Dixons Retail, which owns PC World and Currys, added 2.3p to 18.4p on hopes it will see some benefit from reduced competition.

Shares in BP fell nearly 1 per cent as the deadline approached for its Arctic exploration and share swap deal with Russian government-owned Rosneft. BP had until midnight to secure an agreement with Rosneft and its existing Russian partners in a 50-50 joint venture TNK-BP.Shares were 3.8p lower at 438.5p.

Outside the top flight, shares in London Stock Exchange Group were also higher after it emerged that a group of Canadian pension funds and banks had tabled a rival bid proposal for TMX Group, the owner of the Toronto stock exchange.

LSE, which unveiled a 4 billion merger with TMX in February, rose 56.5p to 884p amid speculation the rival deal could make it susceptible to takeover.

Shares in Dundee-based dental equipment maker 3D Diagnostic Imaging fell a further 0.25p to 2.88p following last week's profit warning, despite the firm yesterday signing up a further UK distributor.