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msn.com: No FTSE recovery amid US concerns: ‘Royal Dutch Shell… down nearly 6%’

23.01.2008 18:28

The FTSE 100 Index dropped back into negative territory after more volatile trading as persistent US recession fears held back a London recovery.

Tuesday’s rate cut from the US Federal Reserve gave the Footsie early momentum with a 100-point gain early on. But signs that the Bank of England may not follow America’s lead with dramatic rate cuts, coupled with ongoing fears over the US economy, dragged the index 130.8 points – or 2% – lower by close to 5609.3.

It was a third day of wild swings for London’s top-flight shares, following a 3% rise on Tuesday after the Fed’s surprise intervention buoyed investors, and the 5% drop on Monday amid global market gloom.

Sentiment was weakened after minutes from the Bank of England’s most recent meeting said the inflation outlook had “worsened markedly”. Just one member of the Bank’s Monetary Policy Committee voted in favour of a rate cut.

Energy giants were responsible for much of the drop after weaker economic growth expectations caused oil prices to fall to 88 US dollars a barrel. Royal Dutch Shell was down nearly 6%, or 105p at 1690p and BP down 23p to 503.5p.

Electricity generator British Energy was the biggest faller, down nearly 6% or 30p to 476p. British Gas owner Centrica also lost 14p to 308.25. On the back foot was B&Q owner Kingfisher, off 4%, or 6.2p, at 135.7p after a downgrade from broker Lehman Bros, who said the group’s earnings would suffer from a downturn in the UK and France.

Broadcaster ITV was also down, 3p to 70.7p, after a note from Bear Stearns warned of disappointing advertising revenues in 2008.

The biggest riser was British Airways, boosted by the falling oil price. Shares were up 4% or 12.5p at 308.5p. Cruise operator Carnival also rose nearly 4%, adding 74p to 2044p. York-based housebuilder Persimmon added 6.5p to 824.5p as investors returned to the stock, which had been under recent pressure from a cooling housing market.

Other firms on the front foot included insurance giant Prudential. The group posted one of the biggest gains of the session after reports said Ping An, China’s second largest insurer, had expressed interest in a stake in the UK firm. Pru shares lifted more than 1%, or 7.5p to 626p, while another potential target – Aviva – was 11p higher at 597.5p.

The biggest Footsie risers were British Airways, up 12.5p to 308.5p, Alliance and Leicester up 28p to 741.5p, Carnival up 74p to 2044p and FirstGroup up 20.5p to 650.5p. The biggest Footsie fallers were British Energy, down 30p to 476p, Royal Dutch Shell down 105p to 1690p, Reckitt Benckiser down 137p to 2447p and British American Tobacco down 94p to 1708p.

http://news.uk.msn.com/Article.aspx?cp-documentid=7326362

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