FTSE ends lower in thin trade

BRITAIN’S top share index closed lower in thin volumes yesterday, ahead of key macroeconomic data later in the week, with BP hit after issuing a €2bn (£1.72bn) bond to help pay for the Gulf of Mexico oil spill.

The FTSE 100 ended down 0.7 per cent at 5,555.97 points, after closing up 44.28 points, or 0.8 per cent, at 5,592.90 on Friday.

Volumes were thin at just 63.8 percent of the index’s 90-day average.

“It has been an uneventful start to the week, with a lack of major economic news giving investors nothing to latch on to,” said Will Hedden, sales trader at IG Index, citing the release of a Bank of England rate decision and US non-farm payrolls later this week as key.

The broader market remained firmly stuck in its recent three-week range, he added, and “there was definitely little appetite for ratcheting up portfolio risk.”

BP fell around two per cent, leading the energy sector lower, after issuing the bond, although the cost of the deal was substantially less than it would have been prior to the capping of the Macondo well.

The oil major’s fall weighed on the integrated oil sector and dragged rivals BG Group and Royal Dutch Shell down around 1.5 per cent.

Looking ahead on the macro front, the US non-farm payrolls data on Friday would be “likely to dominate the week” said James Goldstone, UK equity sales at Execution Noble, while corporate newsflow is also expected to pick up with Alcoa kicking off the third-quarter US earnings season on Thursday.

By the close in London, the Dow Jones industrial average was trading down 0.6 per cent, led by Microsoft on a Goldman Sachs downgraded the stock to “neutral”, citing competition from tablet computers and after earlier trading flat on the release of upbeat US housing data.

Elsewhere on the downside in London, miners took a hit from weaker metals prices, with three-months copper, nickel and zinc all off by session-end and weighing on base metals-heavy stocks Kazakhmys and Xstrata.

Separately, Xstrata was also hit by a report in the Australian Financial Review that it may face competition in the race to acquire Sphere Minerals.

Heavyweight banking stocks ended in the red on regulatory concerns after trading higher for most of the day on finance minister George Osborne’s rejection of a think-tank report the sector may need a second bailout next year.

By the close, HSBC was down 0.3 per cent while state-backed Lloyds Banking Group and Royal Bank of Scotland were both down 0.2 per cent.

“The sector still feels slightly dogged by uncertainty,” said Goldstone. “We’ve been arguing for a little while that the market’s effectively discounting the likely shape of regulation and what that means for capital and return on capital.”