FTSE underperforms as BP weighs on a market awaiting Europe news

BRITAIN’S benchmark share index fell to its lowest level in more than a month yesterday, underperforming gains on rival European stock markets, as BP slumped after the 2010 Gulf of Mexico oil spill returned to haunt the energy company.

Nerves ahead of a European Central Bank meeting today, with the ECB under increasing pressure to take new steps to fight the Eurozone’s sovereign debt crisis, also weighed on markets.

The blue-chip FTSE 100 index ended down 0.3 per cent, or 14.15 points lower, at 5,657.86 points.

It finished at its lowest closing level since ending at 5,635.28 points on 31 July, and underperformed gains on Germany’s DAX and France’s CAC-40 markets.

BP took the most points off the index, falling 2.9 per cent to 423.85p and stripping 9.5 points off the stock market.

The US Justice Department ramped up its rhetoric against BP over the massive 2010 oil spill, but Hartmann Capital trader Basil Petrides said he had used BP’s decline to buy the stock since he felt BP and the US would end up reaching a settlement over the affair.

Petrides added that equity markets could fall today since he felt ECB head Mario Draghi might only offer up limited details on a new bond-buying plan, which might not fully dissipate investors’ worries over the European debt crisis.

“I think the market will go down tomorrow and I will be looking to buy stock. There’s a lot of cheap stocks out there, but what’s cheap today may be cheaper tomorrow,” said Petrides, who bought BP shares at 419p and 423.50p yesterday.

Insurer Resolution was the worst-performing FTSE 100 stock, falling 5.1 per cent.

Traders cited the ongoing impact from a series of broker downgrades on the stock over the last month, after Resolution disappointed investors by cancelling plans to give cash back to its shareholders.

“Investors have lost a bit of confidence in that stock,” said JN Financial investment manager Edward Smyth.

Technical trading patterns pointed to further negative pressure on the FTSE, which remains close to falling below its 200-day simple moving average level – an indicator often used by traders as a signal to sell.

IFR Markets, a unit of Thomson Reuters, wrote in a research note that the FTSE 100 had managed to hold above a key technical level of 5,630 points but would need to break back above the 5,700 mark to get more buying momentum back for the index.

“Technically, the picture is bearish. If it remains below the 200-day average, it could move down to 5,500 points or lower,” said EGR Broking managing director Steven Mayne.

Mayne said he had been “short” on the FTSE, having taken out bets on further falls in the index, but was not taking any major positions ahead of the ECB meeting.

“Sitting on the sidelines seems to be the sensible strategy,” he said.

Meanwhile in the rest of Europe, Nokia slumped 13 perc ent after the company and Microsoft showcased the new Lumia smartphone in New York in hopes of competing with Apple and Samsung, but analysts were less impressed.

The Eurozone’s blue chip Euro STOXX 50 index rose 0.2 per cent to 2,441.81 points.