Late rally despite downward revision of US economic growth

FTSE:5,129.92 (–1.18) Mid-250:9,997.10 (–24.29) Small Cap:2,909.83 (–15.77)

THE LONDON market held its ground yesterday even though Federal Reserve chairman Ben Bernanke dashed hopes for more money printing to boost the US economy.

The FTSE 100 index closed down 1.18 points at 5129.92 after a late rally that saw it regain nearly 2 per cent of its value.

The London market was in negative territory before the speech as hopes faded that more stimulus measures would be announced.

Mr Bernanke’s words at first caused the market losses to deepen, with London’s blue chip shares index at times more than 100 points in the red. However a late rally saw the London market regain its confidence ahead of the bank holiday weekend. Traders took comfort from the Fed’s decision to extend its next meeting to two days to allow it to discuss possible stimulus measures.

The late rally was despite US second-quarter economic growth being revised downwards to 1 per cent from 1.3 per cent, heightening fears the US will lead the world into recession.

Banks, which have borne the brunt of much of the global recovery fears, were again among the biggest losers.

Taxpayer-backed Royal Bank of Scotland was down 5 per cent or 1.2p at 21.9p, and Lloyds Banking Group was off 4 per cent or 1.3p at 29.7p. Barclays was 2 per cent lower, off 2.9p at 155p, while HSBC was down 9.3p at 503.8p or 2 per cent.

There was little in the way of blue-chip news to drive London trading, although investors returned to car insurer Admiral after a dreadful week for the company’s shares in the wake of results on Wednesday. Shares have fallen 17 per cent since its warning over higher-than-expected injury claims, but were 39p or 3 per cent higher at 1318p yesterday.

In the FTSE 250 index, shares in logistics firm Stobart reversed 3 per cent or 4.4p to 128p after it said inaccurate customer forecasting and fluctuations in volume disrupted trade between May and July.

The biggest Footsie risers were ITV up 2p at 57.9p, Fresnillo ahead 61p at 1878p, Burberry up 39p at 1257p, and Admiral ahead 39p at 1318p.

The biggest Footsie fallers were Royal Bank of Scotland down 1.2p at 21.9p, Lloyds Banking Group off 1.3p at 29.7p, Johnson Matthey down 59p at 1607p, and Amec off 26.5p at 849.5p. – (PA)