Economic stimulus news fails to give boost to Footsie

At a meeting in Boston, US Federal Reserve chairman Ben Bernanke said the central bank was prepared to do more to stimulate the sluggish American economy – adding weight to the likelihood of further quantitative easing (QE) in the US.

The optimism failed to ripple over the Atlantic, where insurance and commodity stocks dragged the FTSE 100 Index 23.84 points lower to 5703.37.

Further talk of additional QE in the States weakened the dollar, and saw the pound hit its highest level against the greenback since January at 1.6027 dollars.

BT shot to the top of the Footsie after it struck a deal to secure its central Government contracts, which should allay investors' fears about the group's exposure to next week's spending cuts. Shares lifted 41/4p to 1473/8p.

Bank stocks dominated the risers' board as the sector clawed back ground lost after Standard Chartered's decision to raise additional capital in a rights issue, which sparked concerns of a slew of similar moves.

Barclays has been lower following Standard's move but yesterday recovered 2 per cent, or 5p to 285p, while part-nationalised Royal Bank of Scotland added 11/8p to 463/8p.

HSBC lost gains from earlier in the session to stand 9p lower at 6531/4p, after it confirmed that talks had ended unsuccessfully over its plan to buy a 70 per cent stake in South Africa's Nedbank.

It pulled out of the proposed deal – worth a reported 5bn – after a two-month period of exclusive talks, which were due to expire this weekend.

Shares in Nedbank's majority owned Old Mutual fell 67/8p to 1381/4p, or 5 per cent.

Insurers followed the group on the fallers' board after a downbeat note on the life assurance sector by broker Citigroup.

Standard Life dropped 75/8p to 227p and RSA Insurance lost 43/8p to 1313/4p.

Miners were not far behind, with Kazakhmys down 2 per cent, or 33p to 1384p and Xstrata off 301/2p to 13111/2p.

Outside the top flight, shares in broadcaster ITV were 6 per cent higher after Morgan Stanley upgraded the stock and said the firm and the industry as a whole should benefit from continued strength in advertising spending. Shares rose 33/4p to 663/4p.

Belgium-based gearbox designer Hansen Transmissions was the top riser in the FTSE 250 Index – up 8 per cent or 33/4p to 491/2p – after it said it had received an offer for its industrial gearbox division from Japan's Sumitomo Heavy Industries.

But telecoms group TalkTalk suffered after a broker downgrade, shedding 61/8p to 1333/4p in the second tier.

Transport giant Stagecoach was 2p higher at 185p after it revealed that it is to re-enter the London bus market after striking a deal worth 52.8m for the capital's third biggest operator.

Four years ago, the South West Trains owner sold the business, now known as East London Bus Group, to Macquarie Bank for 263.6m.

East London went into administration after a decline in profitability but has kept a strong share of the London bus market, according to Stagecoach.

The biggest Footsie risers of the session were BT, Royal Bank of Scotland, Barclays and Johnson Matthey ahead by 34p to 1926p.

The biggest Footsie fallers were Old Mutual, Standard Life, RSA Insurance and Autonomy Corporation off 41p to 1348p.