Footsie slips into the red as profit-taking hits sentiment

The FTSE 100 Index was in the red throughout the session and eventually finished 0.63 points down at 5396.48 after its near-three per cent surge on Monday, driven by strong banking results.

The Dow Jones Industrial Average in the United States also saw choppy early trading following overnight gains as the latest results from the likes of Procter & Gamble disappointed.

Flat consumer spending in the United States in June and lower- than-expected factory orders added to economic nerves.

CMC Markets analyst Michael Hewson said: "Economic data continues to disappoint and this makes it inviting to book profits in the short term."

The pound held its ground above 1.59 against the dollar, and traded at 1.20 against

the euro.

In London, many banks gave back some of their gains, but the slack was taken up by insurers after an improvement of one per cent for Prudential and Standard Life.

Sentiment has been boosted by forecasts of higher first-half earnings from the sector this month.

Under-fire Prudential, which is expected to make its peace with investors by increasing its dividend, rose 51/2p to 572p, while Standard Life added 3.1p to 212.3p.

Aviva was also in the spotlight after it signed a five-year agreement with Santander for the distribution of its life protection products from next June.

Shares – helped by a broker upgrade – added another 3.6p to 3761/2p.

Energy stocks were closely watched after the price of oil remained above $80 a barrel, triggering a rise of 14p to 1764.5p for Royal Dutch Shell.

BP, which is preparing for its "static kill" operation to permanently seal its ruptured well in the Gulf of Mexico, added 2.55p to 415.65p.

In the FTSE 250 Index, shares in housebuilder Taylor Wimpey jumped nine per cent or 2.58p to 31.1p after it reported a return to profit at the half-year stage and said net debt had fallen below 1bn to 633.9m.

While the company stressed it still faced uncertain economic conditions, the performance triggered a rise for Barratt Developments, up 2.3p to 1031/2p.

Taylor Wimpey chief executive Pete Redfern said: "We have performed well in the first half of the year and I'm pleased with the progress we've made in reducing costs, improving the margin and developing the landbank."

They were joined by automotive and aerospace firm GKN, which climbed 71/2p to 144.1p after it restored its dividend, moved back into the black and said its strong market positions boosted confidence.

Cazenove analyst Glen Liddy said: "We believe that the recovery in the earnings potential of the group is now well under way. Further benefits from the restructuring programme are likely to be seen in the second half and next year."

There was no such rally for ITV shares, despite reporting a 97m profit for the first six months of the year. It warned that a continuation of the recent rebound in advertising revenues was far from certain in 2011, offsetting chief executive Adam Crozier's five-year turnaround plan for the broadcaster.

Shares fell 1.95p to 51.6p, a drop of nearly four per cent.

The biggest Footsie risers were Centrica up 11.1p to 321p, British Airways ahead 5.1p at 236p, Standard Chartered up 41p to 19021/2p and British American Tobacco ahead 46p at 2234p.

The biggest Footsie fallers were ARM Holdings down 19.9p to 312.1p, Investec off 28.3p at 475.2p, Rolls-Royce down 161/2p to 570p and Segro which closed the day 7.9p lower at 276.7p.