Late rally sees London recover most of its falls

Wednesday 16 July 2008

The FTSE 100 share index closed down 21.3 at 5150.6. The index had been down more than 107 points in earlier trading but rallied on the back of morning gains on Wall Street for the Dow Jones.

Unemployment rose at its fastest rate in June since 1992. The claimant count rose by 15,500, 50% faster than most city forecasts, taking the jobless rate to 2.6%.

Banks led early falls with the FTSE 350 Banks Index down to a 10-year low on renewed worries that the sector would need to tap the markets for money.

HBOS traded below its rights issue price of 275p / share before recovering to close down 5.5 at 254.5. Royal Bank of Scotland fell 2.3 to 165 but Barclays was up 6.25 at 266.75.

News the US economy was slowing down - and the knock-on effect that would have on fuel demand hit the oil price again after crude registered its steepest one-day drop in 17 years in US trading on Tuesday.

Accounting for more than 13% of the FTSE 100, Royal Dutch Shell fell 60 to 1805 and BP was down 14.75 to 509.5.

Industrial controls and washing machine maker Invensys has agreed a new 5-year £400 million credit line to improve borrowing terms. The firm says the deal will allow it to resume dividend payouts for the first time since 2003. Invensys has racked up losses totalling £3 billion since 2005. Shares up 5.5 at 240.

Wolseley down 18 to 272.25, the world's biggest distributor of plumbing equipment revealed a 35% drop in 11 month profit - hit by the housing slowdown on both sides of the Atlantic. Some 6,000 jobs have already gone in the US and analysts warn the firm wont be paying dividends for the next two years to avoid breaching banking agreements.

Fund manager BlueBay Asset Management reported funds under management rose by 12% in what the firm called "difficult markets". The 28.75 bounce upwards to 219 in the share price follows an equally precipitate fall in June on a profits warning.

Buy to let and specialist lender Paragon said Q3 profits were in line with forecasts, helped by a fall in late payments. Shares up 3.25 at 63.

Insurance brokerage Admiral, owner of confused.com, rose 76.5 to 783 on a buy recommendation from UBS following the AA's latest analysis of the car insurance market.

Interdealer brokerage ICAP was up 36.75 to 454.5 after it reported Q1 group revenue up 15% and confirmed full year profits would be broadly in line with market expectations.

Pubs group JD Wetherspoon rose 18.25 to 193 as the firm said sales had picked up in the past 11 weeks. But nightclub group Luminar fell 4.25 to 187.75 on sales down in the first 19 weeks with 12 clubs out of action for refits.

Outside the stock market, Co-operative Group agreed to buy rival Somerfield for £1.57 billion, creating a business that will have 8% of the UK grocery market.

At 5pm sterling was down 0.0088 against the dollar at $1.9967. Against the Euro, sterling was up 0.0012 at 1.2614.

16 July 2008 © Moneyextra.com

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