FTSE left lower as investor confidence knocked

The FTSE lost traction this afternoon after a credit rating cut on Japan knocked investor confidence from the market open, and poor results from fashion chain H&M saw retailers sold.

The FTSE 100 closed down 0.07 per cent or 4.13 per cent at 5,965.08 with miners giving up earlier gains to allow steady asset management stocks into the top ten risers.

Life insurers dominated, with Old Mutual at the lead, up 4.55 per cent to 131.1p, followed by Aviva, which closed 4.05 per cent higher at 452.5p, Legal and General up 3.01 per cent at 112.8p, and the Pru, which closed up three per cent at 704p.

Traders said the US Federal Reserve’s decision to maintain its $600bn bond-buying programme helped sentiment in the financial sector, while analysts said optimism about the resolution of Eurozone problems made the stocks more attractive than bonds.

“Aviva is the best performer, pushing out to its best levels in more than a year – and this momentum has overflowed to other insurers,” said Will Hedden, sales trader at IG Index.

Favourable production updates from a number of mining companies earlier in the day coincided with upbeat comments from analysts to boost resources stocks over the day.

Citi recommended that investors re-enter the mining sector as it has underperformed metal prices this year, while HSBC also moved Randgold Resources’ rating up to "overweight" from "neutral."

Satellite operator Inmarsat entered the top ten risers, climbing 2.15 per cent or 14 points to close at 655p, as S&P Equity Research raised its rating on the firm to "buy" from "hold”.

But an unexpected profit fall announced by Swedish firm H&M sent the retail sector back into a spiral, with Next losing 2.73 per cent or 57 points to close at 2028p.

M&S also fell 1.45 per cent to 360.75p on the news.

Pharma giant AstraZeneca closed down 1.02 per cent to 3,042p after news of a $4bn (£2.53bn) share buyback and forecast-beating fourth quarter earnings failed to quell concerns over its long term income streams.

In the FTSE 250, Heritage Oil recovered some of yesterday's losses during the day, after yesterday’s massive fall when it reported a big gas find in Iraq where many had been hoping for oil.

Pub group Mitchells & Butlers also traded strongly over the day, after reporting that drinkers managed to get out to celebrate Christmas even if their shopping was curtailed.