FTSE Close: Pru, Vedanta down; Centrica up

By Adrian Lowery
Updated: 12:26 EDT, 12 August 2010

17.15 (close)

London's benchmark share index regained its poise today after heavy falls yesterday left it 2.4% lower.

Gains from defensive stocks such as miners and drugs firms helped the FTSE 100 Index close up 20.9 points at 5266.1 despite further falls on Wall Street.

The Dow Jones Industrial Average in the US was another 50 points lower soon after opening as it continued to slide following this week's gloomy economic forecasts from central bank bosses in the US and UK.

Yesterday's rout left the Dow 2.5% lower in the wake of the Federal Reserve's downbeat assessment of the US recovery, which was compounded by the Bank of England warning of lower growth and higher inflation in the UK.

Sentiment was hit again in the US today after more disappointing economic news, with data showing applications for jobless benefits rose last week to the highest level in almost six months.

While stocks in London enjoyed a better session, the pound continued to slide after the Bank's lowered UK growth forecast.

Sterling slipped 0.5% to just under $1.56 and was also off 0.5% to 1.21 euros.

Among stocks, Cairn Energy made strong advances after it revealed it was in talks to sell an interest in its India operations to mining group Vedanta Resources.

The news helped Cairn recover all of yesterday's losses with a rise of 8p to 452.8p, although the developments saw Vedanta plunge to the bottom of the index, down 7% or 176p to 2181p.

Initial riser Prudential lost value despite posting better-than-expected operating profits of £1.68bn and a 5% rise in its half-year dividend. The move has been seen as having the potential to end shareholder discontent over its failed takeover of Asia's AIA, but this was not reflected on the market today as the insurer's shares later closed 8.5p lower at 553.5p.

British Gas parent Centrica was the biggest gainer, up 3% or 10.4p to 330.1p, as it announced a natural gas acquisition in Canada for £229 million.

Elsewhere in the FTSE 100 Index, drink groups SABMiller and Diageo made headway after a solid update from rival AB InBev and a broker upgrade on the entire sector.

SAB lifted 32.5p to 1898p and Guinness brewer Diageo improved by 13p to 1109p.

Outside the top flight, the turmoil at bank note printer De La Rue continued after its chief executive James Hussey quit the business over the paper production irregularities uncovered last month.

Shares slumped another 82.5p to 711.5p, a fall of 10%.

It was joined on the FTSE 250 fallers board by Aberdeen-based oil and gas explorer Dana Petroleum, which fell 4% or 63p to 1630p after it emerged talks over its £1.7bn takeover by a South Korean firm had broken down.

News of another deal falling through hit London black cab maker Manganese Bronze.

It fell 11% or 5.8p to 45p after revealing that Chinese partner Geely had decided against a share placing that would had given it a controlling stake in Manganese.

The biggest Footsie risers were Centrica up 10.4p to 330.1p, African Barrick Gold ahead 14.5p to 557p, GlaxoSmithKline up 30.5p to 1196p and Randgold Resources up 130p to 5595p.

The biggest Footsie fallers were Vedanta Resources down 176p to 2181p, Wolseley off 61p to 1371p, 3i Group down 7.7p to 267.2p and Smiths Group off 31p to 1162p.

16.00

The Dow Jones industrial average fell more than 60 points in early trade after the US Labor Department reported that jobless benefit claimants had risen when economists had expected the number to drop.

It is the latest in a string of bad news on the US job market and the economy in general.

Earnings repots on Wall Street added to the gloom, with Cisco Systems falling short of analysts' expectations. Sara Lee's revenue also missed analysts' forecasts.

The Dow fell almost 320 points over the course of Tuesday and Wednesday.

13.30

The Footsie is back in the black by 5.8 points, at 5,251.0.

But US stock futures trading suggests the Dow will sink back into the red today following a disappointing revenues outlook from IT group Cisco Systems.

Mobile phone giant Vodafone is one of the day's biggest gainers, up 2% or 3.7p to 154.4p, while drink groups SABMiller and Diageo followed it on the risers' board after a solid update from rival AB InBev and a broker upgrade on the entire sector.

SAB lifted 45p to 1910.5p and Guinness brewer Diageo added 21p to 1117p.

Other stocks on the rise included British Gas parent Centrica, up 6p to 325.7p, as it announced a natural gas acquisition in Canada for £229m.

High on the FTSE 250 fallers' board is Aberdeen-based oil and gas explorer Dana Petroleum, down 8% or 132p to 1561 after it emerged talks over its £1.7bn takeover had broken down.

09.30

Traders were today still absorbing yesterday's wary inflation report from the Bank of England and its downgraded economic growth forecasts.

Asian markets finished in the red overnight and the Dow Jones Industrial Average closed 2.5% lower following the US Federal Reserve's downbeat assessment of economic prospects on Tuesday night.

The FTSE 100 index was off 11.6 points at 5,233.6, after falling 2.4% yesterday.

'We did have a reasonable shake out yesterday and the market is just trying to re-establish itself,' said Keith Bowman, analyst at Hargreaves Lansdown.

Lonmin, the world's third-biggest platinum producer, fell 13p to 1,492p as it said it will resume deliveries of base metals after South Africa's Department of Mineral Resources (DMR) overturned a previous instruction.

Global miner Rio Tinto was 45p down to 3,211p after it said it has decided in principle to buy back shares held by Australia's Tinto Holdings, a wholly-owned subsidiary.

India-focused mining group Vedanta Resources is in talks to buy assets or take a multibillion-dollar equity stake in British oil and gas exploration company Cairn Energy, Bloomberg reported.

Cairn Energy gained 3.6p to 448.4p, topping the Footsie risers' list, while Vedanta shed 85p to 2,272p.

Insurance giant Prudential moved to end shareholder discontent over its failed takeover of Asia's AIA by reporting a better-than-expected operating profits haul of £1.68bn and a 5% rise in its half-year dividend.

Shares in the Pru rose 7p to 569p at the end of a strong results season for the sector.

Meanwhile, mid-cap peer Hiscox dropped 3.4p to 351.2p as Goldman Sachs cut its rating to 'neutral' from 'buy'.

But sprawling Anglo-South African financial conglomerate Old Mutual topped the blue chip fallers's list, down 2.7p to 120.4p as Goldman Sachs cut its rating to 'neutral' from 'buy'.

Outside the top flight, the turmoil at bank note printer De La Rue continued after its chief executive James Hussey quit the business over the paper production irregularities uncovered last month.

Shares slumped another 108.5p to 685.5p, a fall of 13%.