FTSE's late dip on oil and Greek fears

LONDON FTSE 100 CLOSE 5,973.78 -16.61

The London market reversed earlier gains to close lower yesterday as worries over surging oil prices and the economic crisis in Greece rattled investors.

The Footsie was down 16.61 points or almost 0.3 per cent, at 5,973.78 as fears over the potential for civil war in oil-rich Libya saw Brent crude hit $118 a barrel before edging back to about $116.

Ben Critchley, sales trader with IG Index, felt the market stood up surprisingly well to the unfolding crisis and its effect on oil prices.

"With the agenda focusing very much on the unrest in Libya and the risk of this spreading further afield, the resolute attitude of investors is perhaps taking some by surprise," he said.

"A return of M&A news certainly seems to be helping lift sentiments in general and there's no escaping the fact that this new-found demand for risk could very quickly ebb away."

The eurozone debt crisis was drawn back into the spotlight following the decision of ratings agency Moody's to downgrade Greece's debt even further below junk status.

The Greek government immediately hit back and said the rating was "completely unjustified". But the move hit banking shares with Lloyds Banking Group down 1.1p at 61p, Barclays off 5.2p at 307.95p and Royal Bank of Scotland off 0.3p to 43.8p.

The pound lost further ground ahead of this week's Bank of England rate-setting meeting, when borrowing costs are expected to be held.

Sterling was down against the dollar at $1.61 and the euro at €1.15.

Some support was given by the emergence of a number of major takeover deals, led by fashion conglomerate LVMH's plans to buy Italian jeweller Bulgari for $6 billion (3.6bn), which saw potential target Burberry gain 4 per cent to 1,200p.

Hard drive maker Western Digital unveiled plans to buy Hitachi Global Storage Technologies, while Rolls-Royce and Daimler disclosed they are in talks with German engines giant Tognum about a potential 2.5bn deal.

Blue-chip testing firm Intertek was the biggest Footsie gainer, up 5 per cent or 95p to 1,994p, after it accompanied an 11 per cent hike in annual profits to 211.9 million with the 450m acquisition of Moody International.

The deal for the Haywards Heath-based firm, which employs some 2,500 people, will boost Intertek's presence in the energy sector.

But news of slowing growth at satellite operator Inmarsat sent it to the top of the fallers' board, down 13 per cent or 91.5p to 593p.

While it posted sharply higher profits for 2010, Inmarsat said revenues growth slowed in the final quarter and the early part of this year, particularly in the maritime sector.Edinburgh-based Forth Ports was also in the spotlight after the Tilbury docks and Grangemouth container port owner revealed a fresh takeover approach from infrastructure fund Arcus valuing the group at around 750m.

The latest proposal is worth 1,630p a share, higher than the 1,400p rejected by Forth from a consortium featuring Arcus in April. Forth's shares, which have jumped in recent days on market speculation of a new bid, were 5 per cent up at 1,605p.