Britains leading share index ended lower on Wednesday as financials slipped on waning hopes of a US plan to flush out toxic assets from banks and miners tracked weaker metal prices, but oil producers lent support. The FTSE 100 closed down 11.21 points, or 0.3 percent, at 3,900.25 after a choppy session that saw it trade in the 3,852.96 to 3,939.16 band.
The UK benchmark is down 12 percent this year but still remains about 12.7 percent higher than its low, hit on March 9. "Its a pretty directionless market," said Philip Gillett, a sales trader at IG Index. "Its such an uncertainty with whats happening to the Geithner plan whether its going to work. It sounds very good in theory ... but its going into uncharted territory. We cant be sure its going to work."
Financials were weaker despite reassurance from US President Barack Obama that his teams effort to revive the worlds largest economy was starting to work.
HSBC, Royal Bank of Scotland and Standard Chartered lost between 2.4 percent and 4.4 percent. Barclays and Lloyds Banking Group gained 4.8 percent and 6.6 percent, respectively.
Life insurers also slipped. Legal & General closed down 7.2 percent after it halved its full-year dividend, while Aviva shed 11.6 percent after going ex-dividend. New orders for long-last US manufactured goods rose in February for the first time in seven months, while sales of newly built US single-family homes unexpectedly rose at their fastest pace in 10 months in February. The economic picture in the UK remained glum.
British retail sales fell more sharply than expected in March and stores are just as gloomy about their prospects for the coming months, a survey showed. Britain suffered its first failed government bond auction since 2002 after bids fell more than 100 million pounds short of the 1.75 billion the government was trying to raise.
Weaker base metal prices pulled miners lower. Anglo American, Kazakhmys, BHP Billiton, Rio Tinto and Eurasian Natural Resources dropped between 1 percent and 4.3 percent. A downgrade to "sell" from "hold" from RBS also weighed on Anglo American. Smiths Group topped the FTSE 100 fallers list, down more than 14 percent after the technology company said underlying pretax profit fell 17 percent. Oil majors added most points to the index, with BP up 1 percent and Royal Dutch Shell rising 2.5 percent.
Defensive stocks, such as utilities, food producers and drugmakers, were in demand. National Grid, Unilever and Scottish & Southern Energy advanced between 1.5 percent and 3.6 percent. GlaxoSmithKline added 2.8 percent. The drugmaker plans to take a significant stake in Aspen Pharmacare Holdings Ltd to strengthen its partnership with the South African drugmaker, people familiar with the situation said.