ONE word can best sum up yesterday's session: choppy. London's benchmark FTSE 100 share index ended up almost 1 per cent during an extremely volatile trading session.
Few would have predicted the positive outcome after blue-chips earlier touched
a five-month low. Despite its 50.3 point gain to 5,476.6 – a rise of 0.9 per cent – the Footsie is down 15 per cent so far in 2008.
Offering some market direction yesterday, European Central Bank president Jean-Claude Trichet said the ECB has no bias on future policy moves after it raised interest rates for the first time in over a year, taking them to 4.25 per cent from 4 per cent.
Meanwhile, data showed the UK services sector shrank at its fastest pace since the aftermath of the 9/11 terrorist attacks.
Banking stocks, hit hard by the credit crunch and writedown fears, added 23 points to the top flight. HBOS gained 7 per cent to 279.25p, Royal Bank of Scotland recovered 4.4 per cent at 213p and Barclays added 2.4 per cent to 292p.
Traders cited renewed market talk that HBOS was to sell its BankWest asset in Australia for its sharp rise. However, HBOS declined to comment.
CMC Markets dealer David Fineberg said: "The sub-5,400 start for the FTSE did inject a degree of panic into the market during early trade.
"Traders across the Atlantic will be looking to limit exposure over the long weekend. The Independence Day holiday (in the US] may see volatility increase (today] but with limited data expected it's going to be a case of looking into next week before any meaningful direction can be seen."
Oil stocks slipped, tracking broader economic concerns. BP, gas producer BG Group and Tullow Oil shed between 0.5 and 2.7 per cent.
Miners were mixed as traders pointed to profit-taking and weak metal prices. Anglo American gained 1.2 per cent, Vedanta Resources climbed 1.2 per cent and BHP Billiton shed 0.5 per cent.
Among other decliners, Carphone Warehouse slipped 3.4 per cent after Merrill Lynch removed Europe's biggest independent mobile retailer from its telecoms preferred list, traders said. Carphone shares have fallen almost 50 per cent in 2008.
Retailers' woes continued after being hit hard on Wednesday following Marks & Spencer's surprise profit warning, dragging the sector deep into negative territory. M&S was down 1 per cent, while peers Kingfisher slipped 1.3 per cent and Sainsbury's fell 3.7 per cent.
Lehman analyst Peter Newland said in a note to clients, that the UK was "on a downward spiral into recession".
"We now judge that a technical recession before the end of 2008 – two consecutive quarters of negative growth – is more likely than not," he added.
Inflationary concerns intensified, with crude prices hitting new record highs above $146.
The full article contains 498 words and appears in The Scotsman newspaper.
