FTSE slides as Indian rate rise fuels growth concerns

Anxiety over India's surprise move to raise interest rates also fuelled concerns over sinking growth once governments start winding down stimulus measures.

The Footsie was down more than 60 points at one stage although it later clawed back most of the losses to finish just 5.58 points down at 5644.54 as US stocks gave a late-session lift to the top flight.

The Dow Jones Industrial Average added 0.4 per cent after a flat start, led higher by healthcare firms after the House of Representatives passed a controversial health reform bill.

But Republicans have vowed to fight back after Congress passed President Barack Obama's landmark healthcare overhaul, while a dozen states promised new legal challenges and health stocks rose.

The narrow vote for final passage in the House of Representatives late on Sunday capped a year-long political struggle that consumed Congress and dented Obama's approval ratings, but the biggest health policy changes in four decades still face a variety of hurdles.

Republican attorney generals in at least 12 states said they would file lawsuits challenging the constitutionality of the overhaul and contending it infringed on state sovereignty.

The pound see-sawed for much of the day against the dollar but eventually edged towards 1.51 as investors moved out of the safe-haven currency into other assets. Sterling moved up to 1.11 against the euro as markets await the outcome of an European summit on Thursday which will hopefully put an end to the Greek debt crisis.

Defensive stocks were in vogue for investors in a choppy session with drugs giants GlaxoSmithKline and AstraZeneca up 71/2p to 1294p and 28p to 2970p respectively. Tobacco companies also made gains, led by Imperial Tobacco with a 19p increase to close at 2050p.

Investment bank Investec enjoyed a healthy debut in the top flight – adding 13p to 552p – but plumbing and heating giant Wolseley saw poorer fortunes.

The firm was one of the market's biggest fallers as it revealed that interim trading profits slumped 34 per cent. The firm lost 2 per cent, or 34p to 1586p.

It also unveiled the results of a group-wide review that will see 19 businesses sold if their performance is not improved – including its UK Build Center builders' merchant chain.

Icap was another to report back after a strategy review. The group – down 101/8p to 3813/8p – said it would drop its struggling full-service agency cash-equities business in Europe and Asia after poor performance. The move will impact 114 jobs.

The inter-dealer broker also lowered profits expectations, guiding for full-year profits in the range of 295m to 315m, down from the 311m to 347m forecasts given in November.

In other corporate news, Irn-Bru maker AG Barr was a strong FTSE 250 riser after it said annual profits were up 20.8 per cent to 27.9m. Barr rose 1 per cent, or 91/2p to 910p.

Office space firm Regus was the biggest second tier riser after it raised its dividend and said it would step up its expansion plans despite a 42 per cent fall in pre-tax profits.

Shares jumped 15 per cent, or 13.3p to close at 1001/2p.

The biggest Footsie risers were Smiths Group ahead 27p to 1127p, Investec, Rio Tinto up 60p to 3730p and Lloyds Banking Group which finished the session 1p better off at 611/8p.

The biggest Footsie fallers were Icap, British Land off 103/4p to 4631/8p, Wolseley and Tullow Oil which closed the day 25p worse off at 1239p.