FTSE dampened by commodities and banks

LONDON eased to a close just over the 6,000 mark after stronger Wall Street sentiment failed to shake off concerns over China’s monetary policy tightening.

The FTSE 100 ended down 21.81 points, or 0.4 per cent, at 6002.07, having closed 0.4 per cent lower yesterday, pulled lower by commodity stocks and banks.

China's central bank raised banks’ required reserves by another 50 basis points, effective Jan, 20, its seventh increase since early 2010.

It prompted anxiety that a cooling of Chinese growth may hurt demand for oil and base metal prices, both of which held below recent highs helping push miners and oil majors like BP lower.

“This move weighed on sentiment throughout the trading day with ARM Holdings one of the few bright spots, jumping higher on the back of those record Intel Q4 results,” said Michael Hewson, market analyst at CMC Markets.

Chipmaker ARM, which recently announced a tie-up with Microsoft and has been the subject of persistent M&A talk, rose 5.3 per cent to 530.50p.

But Mexican precious metals miner Fresnillo fell 4.2 per cent to 1,492.00p, despite posting record annual output figures, as gold fell over two per cent.

Anglo American lost 3.2 per cent to close at 3,300.00p while Antofagasta also fell 2.40% per cent into the red to 1,502p.

Financial stocks were also weighed down by the news, said Sean Power, equity analyst at City Index.

“The banking sector was also weaker today following China’s decision, bucking the recent positive sentiment towards UK banks. Having had a good run this week investors decided to bank some of their well earned profits – excuse the pun,” he said.

Barclays, Royal Bank of Scotland and HSBC all traded lower earlier today but have since shown signs of resilience following better than expected numbers from JP Morgan.”

Prosthetic limb maker Smith & Nephew quickly gave up its early price gains after it issued a statement denying reports of any talks that could lead to a merger or takeover.

The announcement followed a Daily Telegraph report that it was set to enter merger talks with US orthopaedics group Biomet.

BAE Systems rose 1.2 per cent to 346.7p after buying financial cyber defence firm Norkom today. BAE offered £2.10 per Norkom share, valuing Norkom at £217m.

The US had a better day’s trading after investment bank JPMorgan Chase published a record set of fourth-quarter results, lifting its profits by 47 per cent.

JPMorgan shares added 3.3 per cent this afternoon. Its stock has risen 8.3 per cent so far this year.

Strength in banking stocks helped offset US government data that showed December retail sales slightly weaker than expected.

High petrol prices helped push December consumer prices up at the fastest pace in a year and a half, a separate dataset showed.

“Positive Q4 profit growth from JPMorgan helped offset surprisingly poor consumer confidence figures and retail sales,” said Yusuf Heusen, senior sales trader at IG Index.

“Today’s negative figures appear to reflect consumer dissatisfaction with elevated fuel prices and a high unemployment rate, but investors will be hoping the bullish quarterlies seen today and yesterday can continue to boost equities into next week, when a whole raft of company reports are due,” he said.