London’s FTSE 100 Index slipped into the red yesterday on concerns over global political unrest and moves to curb inflation in China.
Banks and miners proved the biggest drag on the top tier, but gains on Wall Street helped the Footsie pull back from steeper losses seen earlier in the session – closing down 4.4 points to 6083.
America’s Dow Jones Industrial Average shook off uncertainty surrounding political troubles in the Middle East and north Africa to settle in positive territory.
But in London, investors were hesitant as the anti-government protests continued and while finance leaders assembled at a G20 meeting in Paris to discuss global economic issues.
Elsewhere, China’s central bank said it will raise banks’ reserve-requirement – the second increase this year – to withdraw excess liquidity from the economy and curb inflation.
This raised fears over Chinese demand for raw materials, which combined with depressed copper prices to hit mining stocks.
In currency news, sterling strengthened further today as speculation grew that one more member of the Bank of England’s rate-setting committee may have voted to raise rates at this month’s meeting. The pound rose to $1.62 and €1.19.
Petrofac led mining sector declines after the Chinese news, down 69p to 1444p, followed by Rio Tinto off 101.5p at 4397p.
However, safe-haven gold was in demand – helping African Barrick Gold move four per cent higher, up 21p to 571.5p.
Shareholders also moved to lock-in recent bank profits, with Barclays down 4p to 329.6p, part-nationalised Royal Bank of Scotland off 0.5p to 48.5p and HSBC 8.1p lower at 722.8p.
Water groups Severn Trent and United Utilities were enjoying better fortunes – up 17p to 1471p and 7p to 594.5p respectively – after broker Goldman Sachs upgraded stocks in the sector.
Their second tier counterpart Northumbrian Water also benefited with an 11p gain to 326.1p.
Elsewhere in the FTSE 250, shares in Rentokil Initial took a fresh battering after new figures showed its City Link delivery arm remained deep in the red.
The support services firm has promised further action to revive the ailing business, but warned City Link faced another year of financial pain.
Seymour Pierce stockbrokers added that overall results from Rentokil, showing a 15 per cent rise in annual profits, were also slightly below expectations and the second tier stock fell six per cent or 5.5p to 92.5p.
Fellow FTSE 250 player Go-Ahead saw shares jump seven per cent or 92p to 1408p after the bus and rail operator reported an eight per cent rise in half-year profits and said annual results were likely to be higher than previously anticipated.
The biggest Footsie risers were African Barrick Gold up 21p to 571.5p, Imperial Tobacco Group ahead 67p to 1992p, Kingfisher up 6.8p to 263.3p and Randgold Resources up 116p to 5035p.
The biggest Footsie fallers were Petrofac down 69p to 1444p, Rio Tinto off 101.5p to 4397p, BHP Billiton down 53.5p to 2391p and International Consolidated Airlines Group off 5.5p to 246.5p.