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FTSE down but well off lows
Business Financial Newswire
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Headline shares closed down but well off lows, losses capped by a string of solid earnings from the US.
At the close of play, the FTSE100 was down 8.8 points at 6,440.6 with the FTSE250 off 75.6 points at 11,799 and the FTSE Smallcaps 24.1 points weaker at 4,056. Volume was fair with 2.6 billion shares changing hands in 507,242 deals.
Wall Street pared initial losses in early deals as forecast-busting results from Bank of America, Merrill Lynch, Merck and Nokia helped to offset concerns China's economy might be growing too quickly.
By London's close, the DJIA was down 16.50 at 12,787.30, having hit as low as 12,735.20.
Back in London, miners helped to drag blue chips lower as fears China may hike interest rates in a bid to curb accelerating growth sparked a slump in metal prices.
Gold and copper prices fell throughout the day as investors fretted that authorities in Beijing would raise the cost of borrowing after official figures showed gross domestic product came in higher-than expected.
Sentiment in the sector was further hit as first quarter production figures from Rio Tinto failed to meet expectations.
In response, UBS said the update disappointed, coming in below its expectations, due to 'a long list of misses' at a numebr of key mines.
Antofagasta was the biggest casualty, down 10.75p at 510.25p, with Kazakhmys off 17p at 1,151p, Rio Tinto 42p lower at 3,077p and Xstrata down 42p at 2,700p.
Elsewhere, domestic interest fears continued to dog financial stocks after stronger-than-expected inflation data earlier in the week fuelled fears of another rate hike in May.
Mortgage banks continued to bare the brunt of the sell-off with Bradford & Bingley down 6.75p at 450.75p and Northern Rock 12p lower at 1,105p.
Ongoing worries over the weak dollar also weighed with US exposed stocks such as BAE Systems off 6.25p at 447.25p, Man Group down 6.5p at 564p and Amvescap off 6.5p at 590p.
Persimmon fell 26p at 1,404p as an in-line trading update from the housebuilder were overshadowed by the ongoing UK interest rate fears.
Brokers, though were more positive on the group, with Bridgewell saying although sales are at a similar level year-on-year, the sales price has picked up moderately and cancellation rates are at a historically low level.
On the upside, with only a handful of blue-chips managing gains, investors decided to put their money in the pharma sector, with GlaxoSmithKline up 21p at 1,480p and Astrazeneca 38p higher at 2,918p.
The sector has seen a number of strong results releases recently, including Merck and Roche, while Astra and Glaxo are due to post their own figures next week.
Making a recovery from this morning, Prudential was 11.5p better at 745p, after the life insurer reported better-than-expected first quarter sales, with a strong performance in Asia offsetting a downturn at its UK division.
The UK's second-biggest insurer said total sales for the three months to March 31st 2007 came in at £640m on an annual premium equivalent basis, beating estimates of £613m.
On the second-line, housebuilders continued to suffer on the back of rate jitters with Bellway, George Wimpey, Barratt Developments, and Bovis Homes all suffering.
Bellway, down 64p at 1,570p, was further hit by an ABN Amro downgrade to hold from buy on the grounds of valuation.
Filtrona was 2.5p lower at 264.5p after news the company announced it had acquired Chicago-based Duraco Industries Inc, a manufacturer of self-adhesive foam products, for $61m in cash.
However, Numis reiterated its 'add' recommendation and target price of 300p.
Among midcap gainers, newspapers, books and stationery retailer WH Smith led the risers, up 11.75p at 443.75p, after reporting a slightly better-than-expected 7% increase in first half underlying pretax profit.
It also accompanied its results with news of a deal with Post Office Limited to open 70 Post Offices in WH Smith high street stores and detailed current trading.
In response, Seymour Pierce upgraded its recommendation to 'hold' from 'underperform'.
EMI was the top riser, up 11p at 236.75p on vague talk of a 270p per share bid for the music group, which has had on and off merger talks with US rival Warner Music since 2000.
Amongst smallcaps, Sovereign Oilfield slumped 20p to 167.5p after the oilfield services group warned that full-year pretax profits will be lower than market expectations.
Also heading south was Global Energy, 6p adrift at 121p in the wake of in-line full-year numbers.
Appian Technology hardened 1p to 11.25p as the provider of Automatic Number Plate Recognition Systems said it has seen a significant increase in orders and business in hand for the first six months trading.
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