FTSE slips lower but profits from StanChart help cheer

RALLYING banks boosted by results from Standard Chartered helped Britain’s top share index pare losses yesterday, but the index still closed lower as geopolitical concerns continued to dog sentiment.

The FTSE 100 closed down 20.87 points, or 0.4 per cent, at 5,914.89, as lingering political concerns in the Arab world continued to dent confidence and rising oil prices threatened to derail the global economic recovery.

The index has lost ground in eight of the last nine sessions.

“There have been some pretty beaten up stocks in the last few days and the early weakness has allowed some bargain hunters to tentatively buy into stocks,” Angus Campbell, head of sales at Capital Spreads, said.

“This indicates there is decent support for the FTSE which continues to face considerable headwinds from the unrest in the Middle East which is keeping oil prices inflated.”

The FTSE closed off its session low of 5,865.92 as Standard Chartered, up 4.6 per cent, and some short-term technical support helped limit losses.

Profit at Standard Chartered jumped 19 per cent in 2010 and the Asia-focused bank said it was off to a record start this year as China, India and other Asian markets boomed.

The results sparked a rally in banks with Lloyds Banking Group and Barclays up 1.6 and 0.4 per cent respectively.

Technical factors have prevented sharper falls in the short term, but point to weakness further ahead, Nicole Elliott, technical analyst at Mizuho Corporate Bank said.

“There is decent support between 5,800 and 5,850,” she said, adding that it had limited the downside since early December.

"Trouble is I think that since then we have also formed a 'rounded top', so pressure for a break below here is increasing,” she said.

Wall Street was higher as the UK market closed after US private sector employers added more jobs than expected last month in a sign of steady improvement in the labour market.

“The payrolls were higher than expected, making investors a bit more optimistic about Friday's non-farm payroll number and the overall state of their economy,” a trader said.

Brent LCOc1 rose to over $117 a barrel on Wednesday on reports of Libyan government counter-attacks on rebel-held towns in the east of the country, heightening fears of a civil war in the world's 12th-largest oil exporter.

Energy and mining stocks were the biggest fallers as the benefits for them of a rise in crude prices were outweighed by fears that this would choke off demand.

Cairn Energy and Vedanta Resources added 1.8 and 2.1 per cent respectively, on hopes the Indian government will soon ratify Cairn's deal to sell its Indian assets to Vedanta.

The FTSE 100 volatility index, a barometer of investor anxiety, is up over 5 per cent so far this week, after rising more than 18 per cent last week. The higher the index, the lower investors’ appetite for risky assets such as stocks.

Whitbread fell 5.2 per cent after reporting a slowing rate of sales growth at its Premier Inn budget hotel chain.

Admiral Group lost 3.1 per cent as traders said the British car insurer's in-line full-year results encouraged some profit-taking.

Serco rose 4.6 per cent after the outsourcing firm posted full-year results.

Rio Tinto , RSA Insurance, and Diageo all went ex-dividend.