London close: Poor start on Wall Street fuels late sell-off

2nd Aug 2011 16:32

A poor start on Wall Street spurred a late decline in London on Tuesday, as the Footsie fell nearly 1% in afternoon trading, despite trading sideward for the majority of the day. The main US equity benchmarks are now trading firmly in the red following worse than expected economic numbers out in the pre-open and ahead of tonight´s Senate vote on the budget deficit reduction bill. According to the Commerce Department, personal spending fell 0.2% despite economists expecting a rise. Weekly retail chain sales also fell by 0.3% week-on-week, and 4.0% year-on-year, according to the latest survey data out from ICSC and Goldman Sachs. Back in the UK, meanwhile, Markit's construction purchasing managers index came in slightly above expectations. The index registered 53.5 in July, down from 53.6 in June. Any figure above 50 means growth. The consensus predication for July 53.1 had been 53.1. In company movements, the big faller on the blue chip index was Hargreaves Lansdown which fell sharply after the Financial Services Authority (FSA) published new rules on how financial services companies provide platform services to investors. Despite the group assuring that the proposed changes will result in "no material impact on our business", shares plummeted over 12%.Soaring precious metals prices boosted both profits and the share price at Mexican silver and gold miner Fresnillo, the best performer of the day. Total revenue rose to $1.056bn (£644.5m) from $605.7m the previous year in the six months to 30 June, while earnings before interest, depreciation and amortisation (EBITDA) rose to $757m from $394.3m. Fresnillo, however, bucked the trend in the metals and mining sectors, which were unwanted on fears over the global economic recovery. Many have pointed to recent disappointing global manufacturing data and the ongoing debt crisis in Europe as factors to constrict economic growth. Kazakhmys, Xstrata, Eurasian Natural Resources Corp., Talvivaara Mining, Ferrexpo and Bellzone Mining were among the worst performers of the day on demand concerns. Despite strong gains earlier on, Barclays finished only moderately higher as investors digested its half-year results. While pre-tax profits fell to £2.64bn from £3.94bn, they jumped 24% on an underlying basis. Standard Chartered and HSBC were also in demand. FTSE 250-listed utility company Northumbrian Water agreed to a takeover bid by Hong Kong billionaire Li Ka-shing, sending its shares higher. UK Water (2011), a company formed by Cheung Kong Infrastructure Holdings (CKI), Cheung Kong (Holdings) Limited and Li Ka Shing Foundation Limited, is to pay 465p per Northumbrian share in a deal that values the water company at around £2.41bn. Sector peers Severn Trent and United Utilities were also making gains.The share price for Rotork climber more than 8% after its interim results sent broker Peel Hunt scurrying to make upgrades to its full-year forecasts for the engineering group. "Strong order intake, record order book and ongoing activity levels have increased management's FY [full-year] revenue expectations," notes analyst Thomas Rands. Gold miner Centamin Egypt dropped more than 20% as it cut its gold production for the full year after import restrictions on products it needs to conduct operations held back output in the second quarter.Amlin, the biggest Lloyd's of London insurer by market value, plummeted in late trading after an announcement revealed that it is "unlikely to meet previous profit expectations for the year ending 31 December 2011,."Meanwhile, investors turned a blind eye to murmurs of a 'gold bubble' and pushed the precious metal to a new record high today. Gold hit $1,640.39 an ounce on Tuesday as fears persisted over the European sovereign debt crisis and gloomy figures coming out of the US. The new high marks the ninth record set this year by gold, which is seen as a safe haven for investors. BCFTSE 100 - RisersFresnillo (FRES) 1,813.00p +4.56%Severn Trent (SVT) 1,451.00p +2.47%National Grid (NG.) 602.50p +2.03%Morrison (Wm) Supermarkets (MRW) 291.20p +1.15%United Utilities Group (UU.) 591.00p +1.11%Next (NXT) 2,362.00p +1.11%British American Tobacco (BATS) 2,856.50p +1.01%British Land Co (BLND) 587.00p +0.86%Imperial Tobacco Group (IMT) 2,095.00p +0.82%British Sky Broadcasting Group (BSY) 700.00p +0.65%FTSE 100 - FallersHargreaves Lansdown (HL.) 506.50p -12.67%InterContinental Hotels Group (IHG) 1,147.00p -5.21%IMI (IMI) 990.50p -4.94%GKN (GKN) 217.00p -4.70%Inmarsat (ISAT) 507.00p -4.43%Kazakhmys (KAZ) 1,255.00p -4.42%Essar Energy (ESSR) 342.40p -4.09%Antofagasta (ANTO) 1,328.00p -3.77%Eurasian Natural Resources Corp. (ENRC) 728.50p -3.76%Kingfisher (KGF) 239.30p -3.55%