FTSE ends down 1% on weak commodities

Britain's leading share index fell yesterday to end the month lower, extending last year's dismal performance, as heavyweight commodity stocks slipped, though banks and property firms offered some support.

The FTSE 100 closed down 40.47 points, or one per cent, at 4,149.64, after losing 2.5 per cent on Thursday. The UK benchmark index has fallen 6.4 per cent this month after losing more than 31 per cent last year, its worst annual drop since its launch in 1984.

"The banks have recovered a bit of their poise in the last few days. Immediate fears of nationalisation have subsided," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"The index is likely to remain range-bound between 4,000 and 4,400... It's still a case of waiting to see what the big corporate earnings numbers come out with starting in the middle of February."

Weaker metal prices weighed on mining stocks, with BHP Billiton, Rio Tinto, Xstrata, Anglo American, Antofagasta, Kazakhmys, and Eurasian Natural Resources losing 2.8 to 11.8 per cent.

The sector was also hurt by Xstrata's rights issue announcement on Thursday and market talk that BHP was guiding its earnings forecasts lower ahead of results next week. BHP declined to comment.

Oil producers were also losers, as BP, Royal Dutch Shell and Tullow Oil dropped between 0.9 and 3.9 per cent.

Data from the US showed its economy shrank at its fastest pace in nearly 27 years in the fourth quarter, sinking deeper into recession as consumers and business cut spending.

However, a survey showed US consumer confidence rose to a four-month high in January but improved less than economists had expected and remained weak overall. In the UK, consumer confidence fell to its second lowest level on record in January as people fretted about the deepening recession and grew increasingly worried about their own finances, a survey showed.

Banks offered some support yesterday after a heavy battering earlier this month. The sector has lost 20 per cent in January after losing nearly 57 per cent in 2008.

Barclays rose 5.8 per cent, Royal Bank of Scotland advanced 4.8 per cent and Standard Chartered added 3.7 per cent. Property stocks were also in demand after Morgan Stanley upgraded its outlook for several firms, saying it was switching its preference to the UK away from mainland Europe.

Land Securities topped the FTSE 100 gainers, up 8.8 per cent, while Liberty International and Hammerson put on 3.8 and 4.5 per cent, respectively.

UBS said in a note that it estimated 36 per cent of the trading statements published by companies this month had been better than expected.

"Earnings momentum is now beginning to move up from its lows," it said, adding that the downgrading of expectations seen towards the end of last year from analysts had perhaps been sufficient, and even too much.