LEADING London shares ended just inside negative territory yesterday as worrying inflation data and writedowns at Alliance & Leicester hit banks, while merger activity helped buoy mining shares.
The benchmark FTSE 100 index closed 8.7 points l
ower at 6,211.9 after a volatile session.
News that the Consumer Prices Index had soared to 3 per cent last month sent the top flight marker 1.3 per cent lower at one stage.
However, renewed speculation of a potential deal between mining giants BHP Billiton and Rio Tinto lent some late session support to the Footsie.
David Fineberg, a dealer at CMC Markets, said: "It's been a choppy day with no shortage of fundamental data around to drive investor sentiment.
"The banks suffered in early trade on a combination of no signs of a rate cut from the Bank of England, reports of a rights issue at Credit Agricole and news of a writedown at Alliance & Leicester.
"Again, however, it hasn't all been negative with ... miners performing well on the back of yet more talk of a possible deal between the big two, BHP Billiton and Rio Tinto."
Retailers had been among the worst affected in the early session sell-off as inflation's surprise jump dampened hopes of an interest rate cut in June.
Among retailers, clothing chain Next was off 43p at 1,266p, followed by B&Q owner Kingfisher, down 3.2p at 148.5p. Marks & Spencer, meanwhile, fell 7p to 398.5p.
Major banks were heavily in the red, with Alliance & Leicester the Footsie's worst casualty after a disappointing trading update. Its shares lost more than 10 per cent, or 51.75p, to 458.75p, after it took a £192 million hit from investments linked to the credit crunch and said mortgage balances deteriorated in the first four months of the year.
Britain's biggest mortgage lender, HBOS, was also on the back foot, down 4 per cent, or 20.5p, to 485p.
HSBC shrugged off the gloom as it continued to benefit from its well-received update on Monday, up 13.5p to 895.5p.
But other losers included Lloyds TSB, down 6.75p to 418p, and RBS, which dipped 7p to 337.75p, while, in the FTSE 250, Bradford & Bingley slipped 14.25p to 158.75p, a loss of more than 8 per cent.
Miners led the risers board, with Rio ahead 236p at 6,645p and BHP Billiton up 27p at 2,020p on the market chatter over a potential deal.
Thomson and First Choice owner TUI Travel, which had been buoyant after revealing demand for its holidays remained strong in the face of economic uncertainty, closed down 4.25p at 255p in a choppy trading day.
David Jones, chief markets strategist at IG Index, said: "6,270 to 6,280 has capped the market for the last five days, so I think we need a decent break through 6,300 to shake off this sideways movement. It's not making that much progress but there is still bullish feeling out there."
The full article contains 523 words and appears in The Scotsman newspaper.
