EARLY optimism surrounding America's hefty interest rate cut faded fast yesterday as stock market attentions turned to the mounting economic gloom.
London's FTSE 100 index struggled to make headway, edging up 15.1 points to close at 4,324.2, while
indices across Europe fell into the red.
The Dow Jones Industrial Average on Wall Street dropped more than 120 points in early trading as investors looked to the economic reasons behind the US Federal Reserve's move yesterday to slash rates to between zero and 0.25 per cent.
A raft of dire economic news in the UK also pegged back progress, with figures revealing the fastest rise in claimant count unemployment since 1991.
The news fuelled expectations of more rate cuts and sent the pound to a new record low, below 1.09.
Paul Webb, chief dealer at CMC Markets, said: "It has been another relatively quiet day for equity markets with traders being largely unimpressed by the Fed's bigger than expected rate cut last night.
"Volumes are once again low with limited corporate news and we just seem to be nudging our way towards the Christmas break now."
Sentiment in London took a hit from a sharp fall for market heavyweight HSBC on rumours of a major capital raising scheme at the bank.
The global giant fell more than 6 per cent, or 43p, to 672p, amid speculation it may have to raise $14 billion (£9bn) through a share placing or rights issue.
Other banks were under pressure, with HBOS off 4.1p to close at 67.8p – a fall of 6 per cent. Royal Bank of Scotland meanwhile dropped 2.5p to 50.5p.
Some sectors made progress, with insurers among those on the front foot. Prudential set the pace with a rise of 6 per cent or 20p to 370p, while Legal & General rose 4p to close at 74.8p.
Higher commodities helped lend some support to the Footsie, as did advances made by oil majors BP and Royal Dutch Shell after oil cartel Opec cut production by 2.2 million barrels a day in a bid to prop up prices.
BP rose by 11.75p to reach 535.5p and Shell gained 38p to end the day at 1,739p.
In corporate news, property consultancy Savills slumped almost 10 per cent, or 24p, to close at 226p after it said full-year profits will be significantly below hopes. Savills expects to make further job cuts as it looked to reduce costs.
Sports Direct International, the owner of Sports World, moved in the opposite direction, up 8 per cent, or 2.75p, to end the day at 38.5p after it stuck by full-year forecasts.
National Express gained ground, up 1.5p to reach 459.25p, after it detailed "robust" trading in its bus business and said rail operations continued to grow passenger revenues, despite the uncertain economic conditions.
Stagecoach, the Perth-based transport group, fared less well in its last week as a blue-chip, falling 3.1p to 129p.
The full article contains 524 words and appears in The Scotsman newspaper.
