City struggles for direction as financial stocks decline

The FTSE 100 Index held firm above the key 5600 level yesterday as it marked one year since the lows seen during the devastating financial crisis.

The top flight is around 60 per cent above the intra-day low of 3460.7 hit exactly 12 months ago, but the market lacked direction in a difficult session.

The Footsie ended the day almost flat – down 4.42 points at 5602.30 – although earlier falls were clawed back after a late session boost from Wall Street.

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US markets were driven higher by the telecommunications sector after Cisco Systems announced it has developed a new high-speed internet router.

Cisco, the world's top maker of network equipment, introduced a router that it says can handle 12 times the internet traffic of the nearest competing product.

Cisco shares fell 0.5 per cent after the news. The stock climbed 4 per cent on Monday partly in anticipation of the announcement, which Cisco had flagged as technology that would "forever change the internet" and show "what's possible when networking gets an adrenaline boost".

The company said AT&T, the biggest US telecommunications company, is testing the new router.

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In London, the main focus was in the currency markets after the pound tumbled following figures showing that UK exports took their biggest plunge in more than three years during January.

Warnings by rating agency Fitch also hurt sterling. The firm said the UK – along with Spain and France – should outline "more credible" plans for public finances in the face of mounting debts or face pressure on their sovereign ratings.

The pound fell to below 1.50 against the US dollar and 1.10 against the euro at one stage.

Joshua Raymond, market strategist at City Index, said Greece's debt crisis and a potential hung parliament in the UK meant markets were "not out of the woods just yet" despite the strong rally seen over the past year.

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Certain firms have recovered particularly well over the last 12 months. Barclays has seen shares rise almost 620 per cent from a low of 47.3p reached in January last year, while miner Kazakhmys has rallied nearly 560 per cent.

Barclays rose 3/4p to 3453/4p yesterday, while Kazakhmys lost 6p to close at 1523p.

Financial shares were weaker after Moody's credit ratings agency said the withdrawal of stimulus measures would leave some banks in Britain fragile and brokers at Credit Suisse remained concerned over possible capital constraints on growth.

Royal Bank of Scotland and Standard Chartered were the worst casualties in the sector, falling 1/2p to 39p and 501/2p to 17251/2p respectively.

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International Power was among the risers however after it declared an improved full-year dividend and said profits rose to 718m. Shares were 31/4p higher at 332p.

Property firm Liberty International moved in the opposite direction, topping the fallers' board with a 201/2p drop to 486p, as it confirmed plans to split its central London and shopping centre divisions into separately-listed businesses.

Analysts said shares were under pressure due to disappointment over its net asset value figure in annual results also out yesterday.

Outside the top flight, waste disposal group Shanks slid 15 per cent – off 181/4p to 1021/4p – after it said it had rejected a revised takeover approach from private equity firm Carlyle worth 120p a share, or 475m.

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The biggest Footsie risers were Aggreko up 21p to 1066p, Old Mutual ahead 21/4p to 1215/8p, GlaxoSmithKline up 191/2p to 12551/2p and Johnson Matthey ahead 26p to 1697p.

The biggest faller was Liberty International.

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