Footsie’s rally grinds to a halt

The rally on London’s FTSE 100 index came to a halt today amid falls from heavyweight oil giant Royal Dutch Shell and concerns over escalating violence in Egypt.

A batch of positive economic reports in the US failed to ease investor concerns, with markets on both sides of the Atlantic under pressure.

The Footsie fell 16.7 points to 5983.3, while Wall Street’s Dow Jones Industrial Average slipped despite strong revenue gains in the American retail sector in January.

A report from the US Labour Department showing fewer people applied for unemployment benefits last week also added little cheer.

In London, the top tier was pulled down by oil firms after Shell disappointed investors with its fourth quarter results.

A three per cent decline for Shell sent it to the bottom of the Footsie, dropping 73.5p to 2177.5p, after tough downstream trading left earnings in the final three months of 2010 short of the $4.7 billion (€3.4 billion) expected in the City.

The performance overshadowed its £11.5 billion profits haul in 2010 and sent rival firm BP down 10.1p to 478p. Oil firms BG and Petrofac also fell, down 28p at 1434.5p or 27p at 1566p respectively.

The ongoing political unrest in Egypt saw traders pull their cash out of riskier assets and into more defensive stocks such as British American Tobacco, up 35p at 2388p, and the US dollar, which rose against the pound and euro.

Sterling eased to just over $1.61 as the greenback strengthened.

A busy session for corporate results saw BT Group earn a place near the top of the risers board after third quarter profits lifted 30 per cent on the back of a strong three months for broadband additions. Shares were 6.4p higher at 184.9p, a gain of four per cent.

Elsewhere in the telecoms sector, mobile phone firm Vodafone announced it expected full-year operating profits to be towards the upper end of the £11.8 billion to £12.2 billion forecast in November.

The company has been buoyed by strong smartphone and data usage in the UK, but shares failed to respond as the company dropped 0.1p to 177p.

Thomson holidays firm TUI Travel was another top flight faller, dropping 4p to 243p after it warned the troubles in Egypt and Tunisia could hit earnings by up to £30 million.

Annual results from high street banking giant Santander shone the spotlight on the banking sector, as it reported an 11 per cent rise in UK profits, but warned over margins.

The Spanish firm also revealed the impact of bad debt charges on the wider group, with overall profits down 8.5 per cent in 2010.

Among its UK rivals, Lloyds Banking Group fell 1.4p to 63p, while fellow part-nationalised player Royal Bank of Scotland added 1p to 43.5p.

Consumer goods group Unilever was in the red as it said raw material costs – such as corn, palm oil and soya beans – caused operating margins to drop in the final three months of last year.

While the Dove soap to Magnum firm cautioned over the impact of cost pressures ahead, its 18% rise in full-year pre-tax profits to €6.1 billion in the year to December beat market expectations. Shares in Unilever dropped one per cent or 20p to 1837p.

The biggest Footsie risers were Aggreko up 70p at 1497p, GlaxoSmithKline ahead 40.5p at 1168p, BT up 6.4p to 184.9p and Intercontinental Hotels up 38p to 1343p.

The biggest Footsie fallers were Royal Dutch Shell down 73.5p to 2177.5p, Sage off 7.9p to 292.8p, Admiral down 37p to 1696p and Lloyds Banking Group down 1.4p to 63p.