TUESDAY MARKET CLOSE: Fading stimulus hopes knock shares

The London market endured a second day of heavy selling as the chances of some sort of monetary stimulus in the beleaguered eurozone receded.

Brenda Kelly, chief market strategist at IG, said: “The emphasis remains to the downside for global markets at the moment. The European Central Bank, which had bolstered hopes of fresh monetary policy last week, has been busily playing down expectations, suggesting that no change in policy will be forthcoming.”

The FTSE 100 ended 32.15 points or 0.5 per cent lower at 6,590.69, having staged a partial recovery late on as investors settled into position for the start of US earnings season.

Retailer Sports Direct was by far the biggest top flight faller, plunging more than 9 per cent on confirmation that founder Mike Ashley had raised £204 million in a sale that reduced his stake to 57.7 per cent. Ashley sold the shares to institutional investors at 850p, below recent highs for the stock, which retreated 82.5p to 811p.

Elsewhere, Barclays finished down 3.2p to 238.6p amid the global gloom, which also saw rivals Lloyds Banking Group shed 1.5p to 73.9p and HSBC fall 1.2p to 605p.

It also followed the disclosure that Barclays had agreed to a multi-million pound settlement in a legal case involving the alleged mis-selling of complex financial products to a care homes operator. The case concerned interest rate swap arrangements based on Libor, the benchmark rate that had been manipulated by Barclays traders.

Shore Capital analyst Gary Greenwood said that by settling out of court, the bank could encourage other claims.

In corporate news, shares in Hornby fell 1.2p to 79p after the toy firm said it was set to rack up annual losses of £1.2m.