London market falls on back of revised USGDP figures
BRITIAN’S leading share index ended 0.6 percent lower yesterday, with sentiment dampened by data showing the United States economy grew at a slower pace than previously thought, pressuring banks and commodity stocks.
The FTSE index ended 31.54 points lower at 5,323.96, reversing earlier gains, to mirror falls on Wall Street after third quarter US economic growth was revised down to 2.8 per cent from 3.5 per cent.
Banks were the biggest drag on the index, with heavyweight HSBC, part-nationalised Royal Bank of Scotland, Standard Chartered and Barclays shedding 0.2 to 4 per cent as investors shied away from risky positions.
“There has been some selling in financials after the GDP figures … and people have been going into safe-haven stocks like utilities,” said Sam Wright, equity trader at Spreadex.
Bucking the trend, Lloyds Banking Group added 2.6 per cent, one of the top gainers on the index after pricing its £3.5bn rights issue at 37p, a 60 percent discount to Monday’s closing price.
Jitters over the pace of recovery in the U.S. economy also put pressure on metals prices, and dragged mining stocks lower. Antofagasta, Rio Tinto, Kazakhmys, Xstrata and Vedanta Resources lost 0.4 to 3 per cent.
Xstrata marked its first entry into the iron ore sector by paying $50m to study an exploration project in the Republic of Congo.
In addition to the downward revision to US GDP growth, other data released yesterday signalled a slow recovery in the world’s largest economy.
The Standard and Poor’s/Case Shiller home price index rose for a fifth straight month, but the rise was slower than expected. US consumer confidence edged up in November after a drop in the previous month.
After the close of European markets, attention will turn to the minutes from the US Federal Reserve’s Nov 3-4 policy meeting.
Among gainers on the FTSE, defensive beverage companies Diageo and SABMiller added 0.2 and 1.1 per cent respectively, as investors turned their attention to lower-risk plays.
Utilities also benefited from their safe-haven appeal, with Centrica, National Grid and Severn Trent up between 0.7 and 1 per cent. United Utilities put on 1.7 per cent ahead of its first-half results today.
British power generation company International Power rose 1.3 per cent as Evolution Securities repeated its “buy” rating, citing moves in Australia to improve coal plant compensation as positive for the stock.