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Grim economic figures puncture bounce-back; CITYMARKETREPORT.

THE three-day bounce-back on London's FTSE-100 Index came to an end yesterday as weak economic news on both sides of the Atlantic hit world markets.

A double-dose of worse-thanexpected figures in the UK painted a bleak picture of the economy on the eve of Chancellor George Osborne's Budget, while Wall Street was also hit by data showing US home prices fell for the third month in a row in January.

The Footsie closed 23.4 points lower at 5762.7, halting a recent rally that saw it recoup many of the losses suffered after Japan's earthquake.

America's Dow Jones Industrial Average slipped into the red and indices across Europe also eased back.

London stocks were knocked after the Office for National Statistics revealed inflation hit a 28-month high at 4.4% in February and said public finances plunged further into the red by pounds 11.8bn last month.

Both sets of data were worse than economists forecast and overshadowed a more upbeat outlook for the manufacturing sector after the CBI revealed order books hit their highest level for three years.

The inflation hike further increases the chances of an imminent interest rate rise, which sent the pound higher - up 0.4% to $1.64 and 0.6% to 1.15 euros.

The market falls came despite an improved session in Japan, where the market clawed back losses amid signs that authorities had stabilised the Fukushima nuclear complex.

But traders were still concerned by the fighting in Libya. Commodity stocks were among those on the back foot in London, with silver miner Fresnillo shedding 30p at 1455p. Elsewhere on the fallers board, Thomson Holidays owner TUI Travel was hit by rising oil prices and concerns over Libya. Its shares fell 2% or 4.5p to 228.2p.

In the FTSE 250 Index, Punch Taverns rose 2% after it announced plans to demerge its Spirit managed pubs business from its tenanted estate.

Forth Ports added 20p to 1634p after it recommended a takeover offer from infrastructure fund Arcus, valuing the owner of Tilbury docks and Scotland's largest container port at Grangemouth at pounds 760m.

Shares in sports retailer JJB surged by 12% - up 3p to 29p - after the firm was saved from administration after landlords backed a rescue deal. Its creditors and shareholders approved a company voluntary arrangement - its second in as many years - which will see it close 43 unprofitable stores.

The biggest Footsie risers were Essar Energy up 9p to 449.4p, Cairn Energy ahead 8.3p to 428p, BG Group up 24p to 1505.5p and Resolution up 4.1p to 283p.

The biggest fallers were GKN down 7.4p to 189.1p, Carnival off 78p to 2452p, Johnson Matthey down 49p to 1835p and ITV down 1.9p to 84.7p.

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* Shares in sports retailer JJB surged by 12% after the firm was saved from administration
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Mar 23, 2011
Words:480
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