Market report: Wednesday close
The City initially welcomed the Chancellor's decision to reduce corporation tax by 2p in the pound to 28p in 2008. But investors quickly realised that, as with all Budgets, the devil is in the detail and that was enough to temper their enthusiasm and cut short the celebrations.
Number crunchers were quick to point out that, to help pay for it, Gordon Brown was raising the tax rate for smaller companies earning up to £300,000 this year from 19% to 20%.
Business has been concerned for some time about the growing exodus of multinationals from the UK because of the growing tax burden and more attractive tax regimes in other European countries. A genuine cut in corporation tax should have helped counter this.
Share prices generally had earlier rallied from opening falls and by the time the Chancellor stood to make his last Budget speech, the FTSE 100 index was 31 points higher 6251.3. Within minutes of having made known his proposals for corporation tax, it touched 6287.5, but later saw its lead reduced to 31.7 at 6252.0. It closed at 6256.8, up 36.50.
Turnover was described as light and opening falls on Wall Street ahead of tonight's decision on US interest rates by the Federal Reserve also helped dampen sentiment. The Dow fell 20.70 to 12,267.40.
Brown's decision to maintain the bio-fuels differential at 20p per litre until 2010 turned out to be good news for alternative fuel producers. Biofuels Corp rose 1¾p to 13½p and D1 Oils put on 8p at 152p.
A penny on a pint of beer and cider and 5p on a bottle of wine may be bad news for drinkers, but the brewers and pub chains thought they had got off lightly.
Mitchells & Butlers fell 8p to 779p but JD Wetherspoon put on 8p to 744p and Greene King added 17p to 1141p. Fag duty went up by 11p a packet, but the cigarette producers have other things on their minds at the moment. Imperial Tobacco, which is faced with raising its offer for Spanish rival Altadis, dropped 2p to 2248p. British American Tobacco put on 1p at 1604p.
British Energy jumped 19½p to 481½p after the Chancellor pledged to double asset sales in the current year to £36bn. The Government still owns 65% of the nuclear power generator and the sale of even half that could raise between £2bn and £3bn.
Pleas for the Chancellor to cut the gambling duty on bingo fell on deaf ears and left Rank Group 9¾p lower at 225p. The bingo operators had hoped for relief ahead of the forthcoming smoking ban, which is expected to hurt profits.
Property shares rose on hopes that Brown would soften the legislation relating to their conversion into real estate investment trusts (Reits). But they were only introduced this year, so the prospect of a change was always remote. Even so, Land Securities rose 57p to 2181p, British Land 21p to 1558p, and Slough Estates 10p to 779p.
Hammerson jumped 79p to 1734p on talk of a bid from the real estate arm of General Electric. Hammerson has also been linked with French property company Unibail.
Oil industry services group Abbot dropped 15¾p to 280 after Goldman Sachs placed 28m shares, or 12% of the company. The were owned byArne Blystad, chairman of Norwegian oil rig operator Songa Drilling, bought by Abbot last year.
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