Britain's FTSE 100 index closed lower on Thursday, overshadowed for a second session by sky-high oil prices, while supermarkets group Morrison approached a five-month low after it issued a profit warning. The grocery chain's shares fell 2.6 percent after said it was facing a 40 million pound accounting hit [nL17151892] following its 2003 acquisition of the Safeway group. At one point, Morrison stock touched 198 pence, its lowest since late October.
Steelmaker Corus was another drag on the FTSE, falling 2.6 percent despite its return to profit during 2004 after comments that suggested a cloudy outlook.
"Overall, we expect the first half trading environment to be broadly in line with the second half of last year. As the year progresses we see conditions as more uncertain," Chief Executive Philippe Varin said in a results statement.
The FTSE 100 closed down 15.5 points at 4,922.1, struggling in a tight range for most of the day as US crude prices reached fresh highs of over $57 a barrel, despite oil producer group Opec's move to up production on Wednesday.
Market watchers say concerns about the inflationary impact of higher energy costs are not far from investors' minds, but some believe the approaching northern hemisphere spring could take some of the pressure off the oil price.
"The oil price is high, but having said that we've got the promise of warmer weather, which might offset some of that to an extent and Opec is trying to do something about it," said Jim McCafferty, Head of Research at Stockbrokers Seymour Pierce.
He was hopeful some of the cash returning to investors from recent dividend payments could underpin the market.
"Markets move in cycles. We're coming up to the Easter holiday period, then we'll see how things move on with effect from April," McCafferty added.
Others detected a move towards defensive stocks, such as utilities National Grid and Scottish & Southern Energy, as the FTSE falls towards 4,900 points. Both stocks rose 1.3 percent.
"If you look at today's winners and the losers there's a bit of a fear factor coming in with some of the commodity stocks up there and some of the safe haven utilities," said a trader.
Property firms suffered in the wake of Wednesday's UK budget, with British Land down 1.7 percent as investors assessed the impact of a re-introduction of stamp duty for commercial property in disadvantaged areas.
"This surprise negative for the sector occurs at a time when investors have been looking to take profits on the back of realisation that capital value growth is likely to slow in 2005, nervousness due to rising bond yields and more recently the likely reversal in corporate bond yields," broker Cazenove said in a note as it cut its stance on the sector to "underweight".
Retailers also stumbled after data showing British retail sales fell at their fastest pace in two years in February. Marks & Spencer and Gus fell 1 percent and 1.4 percent respectively.
But Kingfisher shares recovered from an early drop to trade up 1.7 percent. The owner of do-it-yourself chain B&Q reported a 16 percent jump in full-year earnings, while cautioning that cold weather had hampered trading at the start of 2005.
"People are taking the view that if the weather had been okay they would probably have been alright. The stock's come back a long way anyway and any weakness was in the price already," one trader said.
Miner BHP Billiton was the top blue chip gainer, up 2.6 percent as copper prices remained firm and as the Australian government began talks on an agreement to sell uranium to China.
BHP Billiton has bid $7.3 billion for Australian miner WMC, owner of the world's largest uranium resource.
Among mid-caps, technology company Dimension Data jumped 6.4 percent, with dealers reporting that investment bank UBS had upgraded the stock to "neutral" from "reduce".
Comments
Comments are closed.