FTSE 100 ends down, hit by weak US dollar

The FTSE 100 index of Britain's largest shares fell to its lowest close in seven weeks yesterday as the sliding dollar continued to weigh on stocks with US exposure.

Shares in building materials company Hanson ended down 2.9 per cent, leading a pack of companies whose sales become less valuable as the currency of their key market weakens, or which report in US dollars, devaluing their earnings.

"Undoubtedly the dollar is something which is bowling its way through the equity markets," said Peter Dickson, economist at Commerzbank.

"The general view is that companies with a high dollar exposure will have problems with regard to their earnings next year, and that is what is causing the fall, particularly on this side of the Atlantic."

European shares fell to a five-week low yesterday as the dollar remained near a 20-month low against the euro, and as Wall Street fell sharply, showing a two-day leap in volatility since the dollar began its latest descent on Friday.

The FTSE 100 ended down 72 points, or 1.18 per cent, at 6,050.1, with 95 of its stocks ending lower.

DSGI International, Europe's biggest electricals retailer, fell 3.2 per cent to 195 pence, its lowest level in over three months, as traders cited continued disappointment about the company's sales results last Wednesday.

Shares in BAE Systems fell 3.1 per cent to 391 pence after the Daily Telegraph said yesterday that the government of Saudi Arabia might hand BAE's Eurofighter contract to France's Dassault. Meanwhile, Software company Sage Group dropped 2.4 per cent to 240-1/4p as two recent acquisitions have increased its exposure to the dollar ahead of its full-year results tomorrow, traders say.

Shares in Anglo-Dutch steel and aluminium company Corus Group slipped 1.1 per cent after the company said it would adjourn an extraordinary shareholders' meeting to allow Brazilian steelmaker CSN more time to consider a counterbid to Tata Steel's offer.

Electricity stocks traded lower, with Drax losing 3.2 per cent and International Power falling 1.8 per cent.

Among mining stocks, Lonmin dropped three per cent on a decline in the price of platinum and as traders said hopes subsided that an exchange-traded fund (ETF) may be launched for the metal.

On the upside, ITV led the FTSE 100's list of gainers, up 1.1 per cent, as traders predicted further bid interest after BSkyB bought a spoiling stake in the commercial broadcaster to counter an approach by rival NTL. BSKYB added 0.5 per cent.