FTSE treads water as fears over European debts weigh
BRITAIN’S top shares closed little changed yesterday as persistent concerns over Europe’s debt problems capped moves on the upside while BP fell after the US government launched a lawsuit over the Gulf oil spill.
The FTSE 100 ended down 1.06 points at 5,881.12.
The index ebbed away from an intra-day high of 5,907.10, with analysts citing lingering doubts over Eurozone debt helping to peg back London’s blue chips.
“The FTSE’s a little bit tetchy and a little bit nervous (over Europe’s sovereign debt crisis) but seems content in and around its highs (for the year),” said Angus Campbell, head of sales at Capital Spreads.
Campbell said hitting the 6,000 level by the year-end is still a possibility but the FTSE will need a significant driver, such as EU ministers providing a clearer solution to the debt problems affecting the euro zone.
EU leaders met to discuss changing the bloc’s treaty to create a permanent crisis-resolution mechanism from 2013, and may look at enlarging their existing crisis fund.
BP fell 1.4 per cent after the US government launched a legal battle against the oil major and its partners that might make the cost of the oil spill much greater than earlier thought.
Miners and energy shares were the main weight on London’s blue chips, sagging along with commodities as the dollar strengthened on Europe concerns.
Business support services companies lent their support to the FTSE with Serco up 4.1 percent after reiterating its guidance for 2010, reassuring investors in the light of the UK government’’ austerity measures.
Peer Capita rose 1.9 per cent.
Investors rotated into stocks perceived as better able to weather a harsh economic climate, with drugmaker AstraZeneca up 0.1 per cent, brewer SABMiller up 1.0 per cent and British American Tobacco gaining 0.7 per cent.
Burberry climbed 1.4 per cent as H2O markets said the British luxury goods group’s premium rating is justified as expansion plans and takeover speculation will underpin growth into 2011.
Technical factors were seen pressuring the UK blue-chip index.
“Unless the market can find its footing back above 5,900 the technical indications are for a corrective move from here,” said Jonah S. Ford, analyst at Autochartist.
“The breakout of the Rising Wedge chart pattern, if successful, portends a downside price target ranging from 5,841 to 5,820 in the near term.”
Meanwhile, City Index market strategist Joshua Raymond, said: “The move to scale down risky asset classes is more of a move to wrap positions up for the year end and for an expected leave of absence from the markets, with traders starting to think more about their Christmas shopping than stock investment.
“I get the feeling that we are now getting to that stage where most traders sit back, relax and reflect on a successful last few months trading,” he added.