Poor eurozone growth data halts London's winning run

The London market ended the week in the doldrums yesterday as economic woes continued to haunt the eurozone.

A shock report showing growth of just 0.1 per cent in the 16-nations group during the last three months of 2009 put the brakes on the top flight's four-day winning run.

The FTSE 100 Index ended the day down 19.03 points at 5142.45, while New York's Dow Jones Industrial Average dropped 1 per cent.

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Wall Street's decline came despite a report showing US retail sales grew more than expected in January.

The Commerce Department said yesterday total retail sales increased 0.5 per cent. In addition, December and November were both revised to show stronger spending.

December sales were revised to down only 0.1 per cent, compared with the previously reported fall of 0.3 per cent, while November sales were revised to up 2 per cent from up 1.8 per cent.

Analysts polled by Reuters had forecast retail sales increasing 0.3 per cent last month. Compared to January last year, sales were up 4.7 per cent.

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Stocks fell after China said for the second time in a month it would force banks to increase their reserve levels, effectively tightening monetary policy, while the mood soured further after a disappointing report on US consumer sentiment.

The euro continued to be under pressure as fears over the eurozone economies persisted.

The pound rose to 1.14 euros but fell against the US currency, with 1 worth around 1.56 dollars.

Miners were off the menu following the China decision, as investors fear any slowdown in growth would hurt demand for raw materials.

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This left Vedanta Resources 61p lower at 2363p, Xstrata down 251/2p to 1005p and Anglo American off 371/2p to 2310p.

The flight from risk also put banks under pressure as Lloyds Banking Group fell 11/2p to 465/8p, Barclays – due to post annual results on Tuesday – dropped 63/8p to 262p and Standard Chartered eased 22p to close at 14131/2p.

Royal Dutch Shell also fell 22p to 16631/2p after oil prices dipped below 74 US dollars a barrel as the US dollar strengthened. BP bucked the trend for big losses with a modest fall of 7/8p to 5733/4p.

There was a further blow to confidence after fast-fashion chain New Look abandoned plans for a stock market listing that would have raised 650m.

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In the retail sector, Next fell 3p to 1917p and Marks & Spencer dropped 41/8p to 3277/8p.

Investors sought refuge in safer sectors, with rises for National Grid – up 16p to 640p – household products group Reckitt Benckiser lifted 43p to 3313p and Severn Trent added 9p to 1132p.

Two companies under pressure after results presentations were back on the front foot after heavy losses on Thursday.

Telecoms group BT returned to positive territory – up 25/8p to 1221/2p – after dropping 9 per cent on Thursday due to the Pension Regulator's "substantial concerns" about how the company plans to tackle its 9bn pension deficit.

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As well as BT, Diageo got a shot-in-the-arm after Thursday's results showed a fall in half-year profits.

Shares recovered 12p to 1030p, as Royal Bank of Scotland maintained a buy rating on the stock and said the Guinness-to-Smirnoff firm should benefit when consumer confidence starts to return.

British Airways – another firm with a large pension fund shortfall – fell 83/4p to 1951/2p.

The biggest Footsie risers were National Grid, BT, United Utilities up 9p to 538p, and TUI Travel ahead 43/8p to 264p.

The biggest faller was British Airways.