FTSE pegged back as US debt dominates

The FTSE 100 started on the back foot in early trading as the saga surrounding the US debt crisis continued to pile pressure on world markets.

A glut of major corporate results revealed mixed fortunes as giants like BT, Centrica and AstraZeneca reported.

With US politicians still tussling over whether to raise the country's debt ceiling to avoid a default investors once again ran for cover.

Wall Street yesterday suffered its worst day in eight weeks, hit by weak earnings, lacklustre economic data and the lack of movement in Washington talks as the 2 August deadline for a US default looms.

On London's blue chip index today British Gas owner Centrica slipped by two per cent as investors were unimpressed with a £1.3bn half yearly profit — down 19 per cent on the same period last year.

Miner Xstrata was down by a similar level after announcing the acquisition of Canada's First Coal Corporation for $153m. Rio Tinto and Antofagasta also slipped as the sector struggled.

Chip maker Arm Holdings was also one of the top five losers, down 1.3 per cent while cruise ship company Carnival was down 1.4 per cent.

On the up side BAE Systems was the highest climber despite warning that cuts in the defence budget were taking their toll. It was up by more than four per cent after hiking its dividend and investors were impressed with the company's bagging of several new international contracts.

BT was up two per cent after reporting a healthy profit after weaker sales were offset by efficiency savings.

Outsourcer Capita jumped 1.5 per cent while ITV was up by a similar amount after yesterday predicting a bounce back in advertising revenue.

Tate & Lyle saw a 1.3 per cent after reporting strong results, while AstraZeneca also eased up after it raised its outlook for the full year.

Among financial stocks Lloyds was the strongest performer, up 1.3 per cent.

Meanwhile FTSE 250 listed National Express edged up after reporting a profit surge and the restoring of a dividend.

In other corporate news Credit Suisse said it would axe 2,000 jobs as tough trading took its toll.

Across the Atlantic later, US initial weekly jobless claims and home sales data is due for release.