US news not enough to turn Footsie

UPBEAT manufacturing data from the United States helped the London market to pull back from earlier losses yesterday.

But the surge wasn't enough to help the Footsie close in positive territory, with the index ending the day down 9.03 points at 5,882.18, bringing to an end a four-session winning streak.

David Morrison, market strategist at GFT Global, said: "It looks like it wants to go higher into the year-end… but it's tricky.

"There is also some fairly significant resistance on the FTSE coming up around 5,930 and that might provide a bit of a barrier, so we just need to be a bit wary around that level."

Barclays led the banking sector lower - down 4 per cent - on fears over its exposure to Spain following a move by Moody's to put the country's credit rating under review.

The Dow Jones was up 0.3 per cent in early trading after the Federal Reserve announced factory output rose 0.3 per cent in November, its fifth successive monthly rise. This buoyed the FTSE 100 briefly, but it failed to maintain gains - ending the rally that had seen the top tier hit its highest close for two-and-a-half years on Tuesday.

Sentiment was not helped by less cheery economic news as figures revealed UK unemployment climbed to 2.5 million in the quarter to October.

This sent the pound down sharply, 1 per cent lower at $1.56 and 0.6 per cent down at €1.17.

Barclays was down 10p to 262p as investors fretted over its exposure to Spain after the gloomy Moody's report.

The credit ratings agency may downgrade Spain's debt because of the country's high financing needs in 2011 and its shaky banking sector, fuelling worries over the sovereign debt exposure of UK banks, with Barclays seen as being one of the most exposed.

Other banks also suffered as HSBC dropped 10.6p to 661.1p, part-nationalised Royal Bank of Scotland lost 0.6p to 40.8p and Lloyds Banking Group declined 0.8p to 68.5p.

The biggest rise in the top flight came from Braehead shopping centre owner Capital, which climbed 5 per cent or 19.3p to 415.6p after US firm Simon Property Group wrote to the company outlining its plans for a 2.9 billion takeover.

Outside the top flight, the rapid ascent for shares in fashion firm Supergroup juddered to a halt after the company posted maiden interim results.

Half-year profits rose 68 per cent, but shares slumped 11 per cent after the Superdry owner warned rising raw material prices could hit earnings next year.Shares fell 178p to 1,450p.

Spode and Royal Worcester ceramics group Portmeirion soared 14 per cent or 60p to 495p after it said demand from overseas buyers would ensure 2010 was a record year for sales.

Among the Scottish stocks, engineering outfit Weir Group was up 2.1 per cent or 37p at 1,801p after being fined 3m for breaching United Nations sanctions against Saddam Hussein's regime in Iraq.

Weir pleaded guilty to the charges, bringing an end to the long-running saga.

Dunfermline-based eye scanner maker Optos jumped 6 per cent or 9.75p to close at 171.5p a day after announcing the completion of its $11.75m (7.5m) takeover of peer Opto.