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Footsie recovers from early losses as banks strengthen


Published on Friday 4 July 2008 09:24

The leading share index closed in positive territory yesterday in spite of a rollercoaster session that saw blue chips swing between losses and gains.

The FTSE 100 Index ended the day up 50.3 points at 5476.6 in an extended trading session, with the close delayed by half an hour due to high volumes.

The London market had fallen as much as 68 points at one stage amid more signs of economic trouble, further record oil prices and a rise in European interest rates.

Data showed a second successive month of falling service sector activity, with both Chancellor Alistair Darling and his US counterpart Hank Paulson warning of slowing growth at a meeting yesterday in London.

Brent crude also topped $146 a barrel creating further gloom, while traders were also digesting a quarter-point rise from the European Central Bank.

The ECB's move was widely expected, but it was seen as strengthening the euro at the expense of the dollar, with fears that that could lead to even higher oil prices.

Economic data in the US also added to the volatile trading. The US Government reported that 62,000 jobs were lost in June, but that number was close to economists' forecasts and eased fears that the snapshot of the labour market would be more grim.

However, figures showed the US services sector contracted last month, catching economists by surprise and leaving investors with a raft of figures to digest.

In London, banks were the biggest gainers as investors took advantage of historic share price lows. Halifax Bank of Scotland added 181/4p to 2791/4p, or 7 per cent and Royal Bank of Scotland was up 9p to 213p.

Broadcaster ITV clawed itself back from levels close to all time lows in early session trading, seen amid concerns for the advertising market outlook in the event of a deepening economic downturn. Shares closed up 1.1p at 41.1p.

Engineering firm Amec, which has significant interests in the oil and gas sector, was another of the leading Footsie risers after raising its expectations for the year. That lifted shares 241/2p to 874p, almost 3 per cent.

Drugs giant AstraZeneca also gained 81p to 2314p following a broker upgrade after its patent victory Wednesday. Rival GlaxoSmithKline added 35p to 1181p.

On the downside, retailers were suffering another torrid day. Marks & Spencer, which shed 25 per cent on Wednesday after a shock profit warning, was on the back foot again yesterday as investors continued to desert the stock. M&S fell 4p to 236p.

B&Q owner Kingfisher dropped 1.6p to 100p after Panmure Gordon marked down the stock, but supermarket J Sainsbury was the biggest Footsie faller, down 10p at 280p. In the second tier, video games firm Game Group shed nearly 5 per cent, or 12p to 2501/4p in spite of another strong trading update as investors took profits amid talk that the shares had peaked.

Biggest Footsie risers were HBOS up 181/4p to 2791/4p, Antofagasta ahead 361/2p to 6041/2p and RBS up 9p at 213p.

Biggest Footsie fallers were Sainsbury's off 10p to 280p and Sage Group, off 6.3p at 191.2p.


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