Blue-chips remain level after mixed day of economic news

BRITAIN’S top shares were flat after a roller-coaster session yesterday, with weaker banks and integrated oils just countering a rally by miners as growth and debt crisis worries in the Eurozone offset positive signs on the US economy late in the day.

At the close, the FTSE 100 index was down 1.60 points or 0.03 per cent at 5,517.44, having reversed a rally to a session high of 5,551.38 from an early low of 5,428.60.

“Another day of see-saw action for the FTSE as the early sellers turned into buyers, reversing losses after better than expected US retail sales,” said Angus Campbell, head of sales at Capital Spreads, before it fell back in the closing auction.

Miners had provided the main fuel for the blue chip recovery, with Rio Tinto up one per cent after US retail sales rose more than expected in October.

Precious metals miner Fresnillo added three per cent.

But platinum miner Lonmin fell 2.7 percent as Goldman Sachs cut its rating to “sell” from “neutral” and lowered its 2012 production estimates after results on Monday.

There was also slightly more upbeat news on the UK economy yesterday as inflation in Britain eased more than forecast to five per cent in October.

However, economic news from Eurozone was less positive.

The 17-nation Eurozone economy grew modestly in the third quarter from the second, lifted by France and Germany, but economists said the bloc is almost certainly heading for a recession.

And German analyst and investor sentiment slumped in November, the ninth monthly fall in a row, a survey from the Mannheim-based ZEW economic think tank showed.

Traders also continued to fret over Eurozone bond yields, particularly for Italy which remained at long-term unsustainable levels following the downbeat economic data from Europe.

Italy, where Prime Minister-designate Mario Monti is struggling to form a coalition government, must cut its mounting debt pile and boost growth if it is to avoid a sovereign bankruptcy, which could spell the end of the euro.

“Without a clear mandate and the firepower from all political parties, Monti will find the going tough in order to prevent his country from going into meltdown and having a knock effect across global economies,” said Capital Spreads’ Campbell.

Banks were the worst performing blue chip sector as the Eurozone concerns mounted up, led by part-state-owned lenders Lloyds Banking Group and Royal Bank of Scotland, off 3.8 percent and 3.2 percent respectively.

Luxury goods firm Burberry was the biggest individual blue chip faller, off 5.2 per cent as the global growth outlook took the shine off its in-line first-half results.

Artificial hip and knee maker Smith & Nephew, perennially rumoured to be a bid target, was the top FTSE 100 gainer, up 3.5 per cent to extend Monday’s gains after it was upgraded by Exane BNP Paribas.

“It’s a difficult market to call at the moment, no one wants to be involved if the Eurozone is going to fall apart, but everyone wants to believe the recovering US economy might come to their rescue,” said Mic Mills, head of electronic trading at ETX Capital.