FTSE remains flat as takeover moves are offset by weak Japanese survey

BRITAIN’S top shares closed flat yesterday as concerns over economic recovery after weak data from Japan offset firmer miners, led up by Vedanta Resources which made its play for a controlling stake in Cairn India.

The FTSE 100 ended up 0.66 points at 5,276.10, having closed up 0.2 per cent on Friday. “Investors continue to be spooked by the poor macroeconomic environment. That was reinforced by the disappointing growth numbers from Japan earlier today which set a bit of a negative tone,” said Henk Potts, equity strategist at Barclays Wealth.



In the latest sign the recovery may lag expectations, Japan’s economy grew just 0.1 per cent in the second quarter, below forecasts.

And in the United States, homebuilder sentiment unexpectedly fell for a third straight month in August to its lowest level since March 2009, according to an industry survey.

Integrated oil stocks took the most points off the UK blue-chip index, with BP the worst off, down 1.6 per cent, with traders pointing to mounting worries about the legal threat facing the oil giant after Alabama said it was suing for “catastrophic harm” caused by the Gulf of Mexico oil spill.

Royal Dutch Shell and BG Group dipped 0.3 per cent and 0.2 per cent respectively, as the price of crude slipped.

Elsewhere, British insurer Aviva, down 2.5 per cent, failed to see off bid speculation despite rejecting a £5bn offer from rival RSA Insurance Group that analysts and shareholders said might add up. RSA fell 2.3 per cent.

Miners were in demand. Vedanta Resources will spend up to $9.6bn (£6.1bn) acquiring
as much as 60 per cent of Cairn India, branching out into oil and gas and delivering a cash windfall to its current owners.