Early gains for FTSE fizzle out
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| The London market was virtually unmoved as an attempted rally from Monday's declines fell flat. |
The FTSE 100 Index shed more than 2% on Monday on falling commodity prices, but early gains fizzled out to leave the benchmark index just 2.6 points higher at 4328.6.
Despite a "solid" first quarter performance from supermarket giant Tesco and better than expected US housing figures, further weakness in the mining sector hampered progress.
Investors are still nervous over the sustainability of recent share recoveries, while economic data raised possible inflation concerns after a lower than expected drop in the Consumer Prices Index to 2.2% in May.
Among the Footsie risers, Tesco was helped by underlying like-for-like sales growth of 4.3% in the 13 weeks to May 30. The figure was in line with recent trends and resulted in shares climbing 5.5p to 361.6p, a gain of more than 1%. Rival Sainsbury's, which is due to issue a trading update, was 3.5p higher at 331.75p.
The biggest rise of the session came from BT Group after Morgan Stanley became the latest broker to speculate about an upturn in the company's fortunes following the crisis at its global services arm. Shares, which recently hit a record low, were 7.6p higher at 102.5p, a gain of 8%.
Banks were also on the risers board, with Lloyds Banking Group continuing gains as it rose another 3%, or 2.5p to 69.3p. But elsewhere in the banking sector, Barclays lost 1.75p to 277p despite Shore Capital upgrading the firm to buy.
Shore believes the sale of its fund management arm and an improving economy will mean the bank is unlikely to need further emergency funds. The broker kept Lloyds and RBS - 0.2p up at 38.1p - on hold.
A number of miners began on the front foot after their battering, although many finished the session on the fallers board.
The four biggest Footsie risers were BT up 7.6p at 102.5p, Man Group ahead 11.75p at 286.25p, Lloyds up 2.5p at 69.3p, and National Grid ahead 17.5p at 544.5p. The biggest Footsie fallers were Rio Tinto down 71p at 2829p, BG Group off 24p at 1076p, Smith & Nephew down 9.5p at 452.5p and Amec down 14p at 668p.
