THE LONDON REPORT
THE benchmark share index closed flat yesterday as a retreat in financials and miners, triggered by weak US data, was offset by stronger energy stocks, after a “giant” oil find by BP.
The FTSE 100 index ended down 2.15 points at 4,817.55, after it fell 1.8 per cent on Tuesday.
US private employers cut 298,000 jobs in August according to the ADP National Employment Report.
“Investors are looking for excuses to take profits and the (ADP data) gives more cause for concern about prospects for the world’s biggest economy,” said Jeremy Batstone-Carr, an analyst at Charles Stanley.
Banks, whose performance typically closely mirrors wider risk appetite, suffered as confidence ebbed that the UK and global economies are heading for a swift rebound.
Lloyds Banking Group was the hardest hit in the sector, down 6.2 per cent, after it emerged the lender has won backing from its investors to raise £10bn to reduce its dependence on the taxpayer.
Royal Bank of Scotland, Barclays, HSBC and Standard Chartered shed between 0.6 and 4 per cent.
Also among financials, life insurers were weaker, with Legal & General, Aviva, Old Mutual and Prudential shedding between 2.1 and 8.7 per cent.
The benchmark index rose 6.5 per cent in August overall, and is up 39 per cent since hitting its lowest level in over six years in March.
Also fuelling caution about the economic outlook, US factory orders rose a smaller-than-expected 1.3 per cent in July.
“Macro data has moved to centre stage and given the rise in share prices, investors now need to see proof in the real economy that things are improving.”
Mining stocks took the most points off the blue-chip index, as the capitulated to the pressure of softer metals prices, with Antofagasta, Lonmin, Kazakhmys and Rio Tinto down between 1.6 and 4.3 per cent.
But energy stocks gained after oil major BP made a “giant” oil discovery in the Gulf of Mexico and as crude oil prices held near $68 a barrel after registering falls in the previous session.