FTSE closes at 5352.6

Last Modified: 25 Jul 2008
Source: ITN

The FTSE 100 Index slipped into the red after a raft of insurance firms endured a difficult session.

In volatile trading, the London market eventually closed 9.7 points down at 5352.6 after a bright start on Wall Street helped claw back the heavier losses seen earlier.

US markets were helped forward by positive economic data as home sales, consumer sentiment and goods orders figures all came in ahead of hopes.

In London meanwhile, closely watched UK growth figures showed the economy expanded by 0.2 per cent in the second quarter - its slowest pace since the first three months of 2005, although this was in line with City forecasts.

But banks and financial stocks were put under pressure for most of the day in a hangover from previous heavy losses in the US amid speculation that regional US bank Washington Mutual faced a funding squeeze.

German reinsurance giant Munich Re added to the worries when it said turmoil in equities markets had forced it to take write-downs in the second quarter, leaving likely earnings for the year well below previous forecasts.

Legal & General was worst hit, down 7.1p at 98.6p - a fall of almost 7 per cent. RSA Insurance slipped 6.5p to 128.8p, Aviva shed 21.5p at 490p and Standard Life fell 6.5p to 221.25p.

Among the banks, Royal Bank of Scotland was 4.25p lower at 215p, while Lloyds TSB was 6.75p cheaper at 331.25p.

Halifax Bank of Scotland spent much of the day in negative territory but eventually closed 8.75p better at 310.25p, amid speculation of a break-up bid by US bank JP Morgan Chase.

Retailers saw a mixed session after falls seen on Thursday, when official figures revealed a 3.9 per cent fall in retail sales volumes during June.

B&Q owner Kingfisher dropped 4.1p at 120.2p as it gave back some of the gains seen after Thursday's trading update.

But Marks & Spencer crept into the black after earlier falls, gaining 0.25p to 259.75p. Next cheered 18p to 1034p.

Gains for oil firms amid a rise in the cost of crude failed to lift the top tier, despite BP adding 5p to 517.5p and Royal Dutch Shell up 12p at 1802p.

Winners: Ferrexpo, up 10.25p at 263.25p, BG Group up 40p at 1108p, Sainsbury's up 9.25p at 317.25p, and HBOS up 8.75p at 310.25p.

Losers: Eurasian Natural Resources down 69p at 880p, Legal & General off 7.1p at 98.6p, RSA Insurance down 6.5p at 128.8p, and Hammerson, which ended the day 46.5p lower at 925p.

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