Britain's top share index ended flat in low volume on Wednesday, with investors uncertain about the future path for equities due to concerns over global growth and corporate earnings. The FTSE 100 was up 0.41 points, or 0.01 percent, at 5,664.48, having swung in a 50 point arc during the session, on volume of less than 65 percent of the 90-day daily average.
"London has had a remarkably steady if fairly quiet session, but with volumes remaining below average there remains an underlying concern that any shock could bring back the violent swings seen in much of the second quarter," said Mike Mason, a trader at Sucden Financial Private Clients.
US blue chips were 0.3 percent lower by London's close, with traders unsettled by concerns over US corporate earnings and awaiting the 1800 GMT release of minutes from the last Federal Open Market Committee meeting.
A sales warning from engine maker Cummins Inc was the latest worrying signal from the US corporate sector.
The warning from Cummins had a knock-on effect in London, with Aggreko shedding 4.3 percent as traders noted that the US firm is a big customer of the temporary power group.
Automotive parts firm GKN and pumps maker Weir Group were also impacted by negative sentiment from the Cummins warning, down 2.6 percent and 4.0 percent respectively. Second-line engineers suffered too, led by Senior, down 5.6 percent, with the FTSE 250 index sharply underperforming the blue chips, closing down 0.9 percent.
Soft drinks firm Britvic, however, was the top mid-cap casualty, down 13.4 percent as it warned of around a 15-25 million pounds hit on pretax profit for the current and next financial years. It said it has been unable to speedily resolve issues with the caps on its Robinsons Fruit Shoot and Fruit Shoot Hydro products, on which it issued a recall last week.
British luxury brand Burberry was the biggest blue chip faller, down 7.4 percent as it saw a slowdown in quarterly sales growth as trading conditions worsened. Weakness in mining stocks was a drag on blue chip sentiment, with the sector dented by a cautious Credit Suisse note, cutting forecasts for metals and oil prices.
"With the relief rally now mostly complete, the next move in commodity prices is likely to again be driven by developments in global growth ... This suggests to us that the balance of near-term risks to the industrial commodity complex is to the downside, particularly in light of the speed and magnitude of the recent bounce," Credit Suisse said in a note.
However, commodities trader Glencore and its mining bid target Xstrata bucked the weaker trend, adding 1.9 percent and 1.5 percent respectively.
Xstrata has set September 7 as the date its shareholders will vote on the planned $26 billion take-over, effectively giving Glencore and rival investor Qatar Holding six weeks to hammer out an agreement on the terms of the offer.
Energy stocks lent their underlying strength to the blue chips too, benefiting from firmer crude prices. Brent and US crude futures were higher although they pared their gains after the Energy Information Administration's weekly oil inventory report showed crude stocks fell more than expected last week.
Crude prices have fallen sharply over the second quarter, however, and Bill O'Neill, Chief Investment Officer for Europe, Middle East and Africa at Merrill Lynch Wealth Management cited the fall as one of the reasons the bank is starting to consider opportunities to marginally increase equity allocation.
"While there remain risks to growth, we believe more accommodative global monetary policy, alongside the fall back in oil prices in the second quarter, may lead to the basis for a gradual turnaround in sentiment as well as the economy. Our sense is that assets such as equities, have already discounted the weaker economic environment," O'Neill said in a note.
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