FTSE driven back below 6,000 mark

Feb 28 2008

More worrying news from the US economy and losses in London’s banking sector combined to send the FTSE 100 Index back under the 6000 mark today.

NatWest owner Royal Bank of Scotland reported profits of £10.3 billion, but widening losses from the credit crunch of £2.5 billion weighed on shares and knocked rivals across the sector.

Disappointing unemployment and GDP data from the US, as well as inflation warnings from Fed chairman Ben Bernanke added to the negative sentiment, leaving the Footsie down nearly 2%, or 110.8 points, to close at 5965.7

New York’s Dow Jones Industrial Average was also down more than 1%.

In London, banks suffered in the wake of the mixed results from RBS, whose shares started the day in positive territory but ended the session 8p off at 402p.

Barclays and Halifax Bank of Scotland both lost ground, losing 19.5p at 500.5p and 22p at 635p respectively. The drop for HBOS saw it shed more than 3%, impacted also by a broker downgrade following disappointing results yesterday.

Alliance & Leicester was another big faller, losing much of the recent gains seen amid speculation that it was in the sights of Lloyds TSB for possible takeover. Shares tumbled 29p to 565p.

Pest control-to-hygiene firm Rentokil Initial was the biggest loser of the session after warning that pre-tax profits would fall significantly from 2007’s £142 million.

Shares dived by nearly a quarter, or 24.5p, to 80.5p, as the company said problems at its City Link parcel business continued to weigh on prospects.

Other heavy fallers dragging on the index included miner Xstrata, which slipped 168p to 3969p after reports of shareholder opposition over a potential offer from Brazilian miner Vale.

Housebuilders Persimmon and Taylor Wimpey also lost recent ground after FTSE 250 firm Redrow warned investors about this year’s outlook. Persimmon was off 18p at 752p, with Taylor down 7.7p to 174.2p.

Shares in Redrow bucked the trend, up 6.75p at 309p, as analysts at Landsbanki suggested it may become a takeover target.

Elsewhere, betting shop firm William Hill dropped 16.75p to 396.75p after Goldman Sachs cut its target price for the firm. Rival Ladbrokes went on to lose 8.75p to 317.75p, despite reporting a 25% jump in the amount of money staked by football punters since the start of the Premiership season.

Among the top flight risers, leisure group Whitbread was the leading light after a “resilient” trading update lifted shares 7%, or 86p, to 1312p.

Also gaining was Norwich Union owner Aviva, which unveiled operating profits slightly ahead of City expectations. Shares were up 6p to 616p.

The four biggest Footsie risers were Whitbread up 86p to 1312p, Aviva up 6p to 616p, Enterprise Inns up 3.5p to 428.25p and Antofagasta, which added 6.5p to 840p.

The four biggest fallers were Rentokil Initial, down 24.5p to 80.5p, Yell Group down 30.5p to 242.5p, London Stock Exchange down 81p to 1384p and InterContinental Hotels, which closed 41.5 lower at 806p.