FTSE closes down at 6659.1

Last Modified: 17 Jul 2007
Source: ITN

The FTSE 100 Index has closed 38.8 points down at 6659.1 as fears of another hike in interest rates overshadowed trading.

Inflation figures also left investors concerned over another interest rate rise with economists predicted a rise in borrowing costs to 6 per cent as early as September.

A strong start on Wall Street failed to lift London's leading share index with stocks also subdued by a raft of broker downgrades.

Mining group Lonmin was the biggest faller after it disappointed the market with lower-than-expected sales forecasts.

The stock was down 152p at 3833p with other miners on the back foot including Vedanta Resources - down 44p at 1771p - and Antofagasta down 13p to 702p.

Rolls-Royce also suffered - down 16p to 548.5p after Credit Suisse downgraded the blue-chip stock. It said the company remained a strong long-term bet, but worried about currency headwinds.

Anglo-Dutch publisher Reed Elsevier fell 19p to 656p as investors digested news that it had sold the remaining parts of its Harcourt Education division for £2 billion.

In the water sector, a slew of rating changes from UBS saw share price movements across the board, with a downgrade for Kelda Group causing the stock to slide 24.5p to 870.5p.

Severn Trent was down 12p to 1343p despite an upgrade from the broker in a depressed wider market, while second tier water utility Northumbrian Water - again upgraded by UBS - also slipped into the red, to close 0.25p down at 311.25p.

Sugar manufacturer Tate & Lyle topped the risers board - one of only a handful of stocks in positive territory - after Goldman Sachs raised its rating from neutral to buy.

The broker said the stock was well positioned to outperform after a disappointing first half. Shares were up 28p at 600p.

Elsewhere, JJB Sports shares held firm, even though the company reported a 4.1 per cent drop in like-for-like sales. Analysts were comfortable with the update as it included comparisons with strong World Cup trading last year. Shares were 5.75p higher at 252.75p.

The biggest FTSE risers were Tate & Lyle up 28p at 600p, Royal Dutch Shell up 12p at 2052p, Lloyds TSB up 3p at 572p and Barclays up 3.5p at 732p.

The biggest FTSE fallers were Lonmin down 152p at 3833p, Schroders down 48p at 1280p, Rolls-Royce down 16p at 548.5p and Reed Elsevier down 19p at 656p.

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