FTSE dampened by disappointing corporate results

The FTSE has closed lower after spending the day hovering around the 6,000 level, led down by weaker commodity prices and poor corporate earnings.

The FTSE 100 closed down 0.53 per cent or 32.28 points at 6,020.01.

Investors were presented with a barrage of less than robust results after weeks of generally positive corporate news, damaging confidence on the outlook for the world economy.

Diageo, the world's biggest spirits group, led the fallers, dropping 4.63 per cent to close at 1,195p after missing forecasts with a 9 per cent rise in half-year earnings.

“Much of this was related to poor performance in Ireland, Spain and Greece where sales fell 13 per cent and, throwing caution to the wind, the firm maintained that an early recovery in those regions was not forecasted soon,” said Joshua Raymond, market strategist at City Index.

International Consolidated Airline Group, the new parent to BA, was also sharply lower, off 3.31 per cent to close at 251p in sympathy after its fellow airline Air France-KLM warned would miss a key profit target.

KLM said a combination of snow, strikes and security problems caused it to post a net third quarter loss of €46m (£39m), confounding analysts who had expected a profit of around €60m.

Life insurers such as Legal & General and Prudential sank after profit taking on their recent rally, David Buik of BGC Partners, said.

Rio Tinto more than doubled profits in its 2010 results but was one of the biggest losers of the day, closing down 2.36 per cent at 4,549p.

“There is an element of ‘buy the rumour; sell the news’ going on here, with shareholders happy to lock in profit after a stellar performance by the mining sector over the last 12 months,” said David Jones, chief market strategist at IG Index.

Software providers Sage Group (up 2.34 per cent to 293.4p) and Autonomy (up 2.23 per cent to 1,607p) topped the risers after UBS analysts upgraded Autonomy to "buy" from "neutral".

Smith & Nephew, Europe's largest artificial knees and hips maker, also closed up 2.1 per cent at 727p after it posted a nine per cent rise in fourth-quarter trading profit. Its chief executive, David Illingworth, is leaving, to be replaced by Olivier Bohuon, executive vice-president at Abbott Laboratories, renewing takeover speculation.

Today’s widely expected MPC announcement that interest rates would remain unchanged did not affect the market, but banks suffered after Eurozone sovereign debt concerns have renewed, with Portuguese bond spreads widening out to record levels.

On the FTSE 250, stockbroker Hargreaves Lansdown led the risers, up 4.3 per cent to 570p after posting record-breaking second half 2010 results.

Lloyd’s insurer Beazley is still high after delivering best-in-class results yesterday, finishing up 2.6 per cent at 134.1p, and joined by fellow Lloyd’s syndicate Catlin, which delivered solid full-year results despite taking a $218m loss from catastrophes last year.

Catlin ended the day up 2.1 per cent at 393.6p.

US markets opened down, led lower by technology stocks after networks giant Cisco Systems disappointed with its results.

Cisco slumped more than ten per cent in extended trading after it reported a cautious outlook and declining profit margins.

“Earnings data from Pepsico did nothing to diminish this sentiment despite beating expectations of $1.04c a share. Its warnings about future earnings growth spooked shareholders as the company cited higher commodity costs,” said Michael Hewson, market analyst at CMC Markets.

The Dow Jones industrial average ended down 24.52 points, or 0.2 per cent, at 12,215.37.

The Standard & Poor's 500 Index closed down 0.46 points, or 0.03 per cent, at 1,320.42. The Nasdaq Composite Index finished down 2.35 points, or 0.08 per cent, at 2,786.72.