February 18, 2009 / 7:04 AM / 11 years ago

FTSE ends down as commodities and data weigh

LONDON (Reuters) - The top share index ended 0.7 percent lower on Wednesday, down for its fifth straight session, as energy stocks fell on depressed oil prices, while financials took a further beating and weak data weighed.

City workers walk outside the London Stock Exchange in Paternoster Square October 27, 2008. REUTERS/Alessia Pierdomenico

The FTSE 100 .FTSE closed down 27.30 points at 4,006.83, after falling 2.4 percent on Tuesday.

The blue-chip index, which touched a session low of 3,938.92 before recovering slightly, is down 9.6 percent on the year after falling over 31 percent in 2008.

Companies going ex-dividend, including BP (BP.L) and Rio Tinto (RIO.L), weighed on the index, but weak data and the bleak economic outlook also deepened losses from commodity stocks.

“There’s no doubt the economy is going from bad to worse, and it’s no surprise that banking and materials stocks are being hit hardest against a backdrop of this nervousness,” said Henk Potts, strategist at Barclays Stock Brokers, in London.

British factory orders fell more than expected this month and at their fastest rate since 1992, the Confederation of British Industry said.

British average weekly earnings grew by 2.2 percent in December 2008 compared with a year earlier, the weakest pace of growth since February 2003, the government said.

Energy stocks took the most points off the index, with ex-dividend BP down 3 percent. BG Group BG.L, Cairn Energy (CNE.L) and Tullow Oil (TLW.L) were down between 1.4 and 2.3 percent.

Similarly mining stocks were hit by the forlorn outlook for demand with Rio Tinto, Kazakhmys (KAZ.L), and BHP Billiton down 0.7 to 2.2 percent.

Minutes from the Bank of England’s February Monetary Policy Committee meeting revealed that policymakers voted unanimously this month to seek government consent for quantitative easing and voted 8-1 to cut interest rates to 1 percent, a record low.

This did little to settle anxious investors’ nerves and the pound fell to a two-week low against the dollar below $1.41.

Royal Bank of Scotland (RBS.L) tumbled 12.6 percent after the Daily Telegraph said the lender needs to find up to 8 billion pounds if it is to subscribe to a state-backed insurance scheme designed to cap any losses on toxic assets.

Standard Chartered (STAN.L) and Lloyds Banking Group also fell but HSBC (HSBA.L) added 1.9 percent.

Shares in UK insurers were sharply lower again, led by Legal & General (LGEN.L) which fell 11.7 percent as it failed to reassure investors on Tuesday in an update on its capital position, despite quelling rumours of a rights issue.

Prudential (PRU.L) fell 6.6 percent while Amlin (AML.L) lost 1.5 percent.

The picture on the other side of the Atlantic was just as grim with U.S. stocks falling to three-month lows after data showed the housing market deteriorated further last month while industrial production shrank more than forecast in January.

“U.S. January industrial production and housing starts figures illustrated the depth and breadth of the fallout from the credit-fuelled boom of the past decade,” David Buik, senior partner at BGC Capital Partners said in a note. “Most worryingly, industrial production appears to be in free-fall.”

Shares in UK shopping mall owner Liberty International LII.L gained 5.6 percent, boosted by talk that it could sidestep a deeply-discounted rights issue by spinning off its non-retail arm and placing shares with key investors.

Defensive drugmakers were in demand, with GlaxoSmithKline (GSK.L) up 1.5 percent while Shire SHP.L gained 0.7 percent.

Schroders (SDR.L) (SDRt.L), Scottish & Southern Energy (SSE.L) and Hammerson (HMSO.L) also fell after going ex-dividend.

Editing by David Cowell

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