London close: Euro worries pull Footsie lower

11th Jan 2012 16:58

Eurozone debt worries weighed on London's stock market today with some disappointing economic data from the region's largest economy dampening the mood. Energy stocks led the decline on the FTSE 100, tracking oil prices lower.SOVEREIGN DEBT CRISIS RUMBLES ONNews that German gross domestic product (GDP) may have shrunk in the fourth quarter of 2011 spooked the markets today. While the economy expanded by 3% over the year as a whole, according to preliminary figures from Destatis, an official from the German national statistics office told a news conference that the economy likely contracted by "around a quarter of a percentage point" in the last three months of the year. German Chancellor Angela Merkel offered some cheer when she threw her weight behind the idea of European governments contributing more upfront capital to the European bail-out fund, the European Stability Mechanism (ESM). The pressure is mounting on Merkel to accept the implementation of so-called "euro bonds", a measure which would see Eurozone governments issue debt jointly. The bid-to-cover ratio at today's German bond auction rose to 2.8, from 2.1 last time, showing heightened risk aversion as some investors may expect the currencies of either country to gain should the Eurozone break apart. Meanwhile, David Riley, the head of sovereign ratings for Fitch has today suggested that the European Central Bank ought to do more to support Italy and ramp up its purchase of government bonds in order to prevent a "cataclysmic euro collapse."UNILEVER DROPS AFTER DOWNGRADEUnilever fell after Morgan Stanley downgraded its rating from overweight to equalweight, citing a limited scope for earnings upgrades this year.Gas and electricity giant SSE, the nation's second-largest energy supplier, fell after EDF Energy said it would cut gas prices by 5%, becoming the first major supplier to pass on falling wholesale prices to customers, it claims. Oil peers Shell, Petrofac and BG were out of favour, tracking crude prices lower. BG was also in the news on reports that it has received six to seven preliminary bids for its 65% stake in India's Gujarat Gas in a deal worth $900m.Meanwhile, banking stocks continue to climb with RBS leading the way. The lender's Irish unit is preparing its second round of job cuts in four years as part of an effort to save about €50m ($63.9m), according to two people with knowledge of the plan. Furthermore, an RBS spokesman also said that the bank is to cut 272 jobs in the UK corporate banking unit. Lloyds and Barclays were also in demand. ARM was among the stocks providing a drag as the Consumer Electronics Show (CES) in Las Vegas drags on. Nomura has reiterated its neutral rating on the stock today, highlighting yesterday's CES keynote by US chip rival Intel concerning its next attempts to break into the mobile market. "Intel is making progress in painting a better picture for smartphones and a closer attention should be paid going forward," the broker said.RETAILERS IN FOCUS Supermarket chain Sainsbury's upbeat Christmas trading update was met with praise from the markets early on but the stock fell into the red by lunchtime. Panmure Gordon kept its hold rating on the stock, saying that the shares "look reasonable value at these levels, given the company's cyclical stability and decent yield." It seems the markets were underwhelmed by the cheery festive trading statements with bakery chain Greggs also falling into the red despite seeing a like-for-like (LFL) sales growth of 5.1% in the five weeks to January 7th. SuperGroup, the owner of the fast-growing Superdry clothing brand, saw sales rise but wholesale problems have continued to weigh on the stock with broker Collins Stewart saying that "confidence in forecasts remains low". On the FTSE 250, recruiter Michael Page was a high riser on the FTSE 250 after its fourth quarter update. Prime Markets said that the firm's 25% rise in full-year gross profits along with its expansion into new territories should fuel growth in 2012, while Oriel Securities said that a conference call with management was reassuring. Polymers company Fenner and price comparison group Moneysupermarket.com were also on the up, rising nearly 7% each.BCFTSE 100 - RisersInternational Consolidated Airlines Group SA (IAG) 152.70p +3.95%Cairn Energy (CNE) 280.00p +3.55%Lloyds Banking Group (LLOY) 28.17p +3.15%Royal Bank of Scotland Group (RBS) 21.79p +3.12%Carnival (CCL) 2,256.00p +2.87%Essar Energy (ESSR) 170.00p +2.72%ITV (ITV) 73.75p +2.72%Aviva (AV.) 315.30p +2.70%Legal & General Group (LGEN) 109.80p +2.62%Meggitt (MGGT) 366.20p +2.38%FTSE 100 - FallersMan Group (EMG) 104.50p -3.51%Aggreko (AGK) 2,052.00p -3.34%Unilever (ULVR) 2,084.00p -3.11%Royal Dutch Shell 'A' (RDSA) 2,327.50p -3.10%Royal Dutch Shell 'B' (RDSB) 2,413.50p -3.03%SSE (SSE) 1,264.00p -2.84%ARM Holdings (ARM) 588.50p -2.57%Petrofac Ltd. (PFC) 1,532.00p -2.42%Weir Group (WEIR) 2,146.00p -2.10%BG Group (BG.) 1,448.00p -2.03%FTSE 250 - RisersMoneysupermarket.com Group (MONY) 109.30p +6.84%Fenner (FENR) 438.00p +6.73%Michael Page International (MPI) 368.00p +6.60%Kentz Corporation Ltd. (KENZ) 472.00p +5.90%Rentokil Initial (RTO) 70.40p +5.71%Big Yellow Group (BYG) 277.20p +5.44%COLT Group SA (COLT) 89.80p +4.48%Micro Focus International (MCRO) 420.00p +3.70%Jardine Lloyd Thompson Group (JLT) 700.50p +3.70%SDL (SDL) 680.00p +3.34%FTSE 250 - FallersBrown (N.) Group (BWNG) 229.80p -5.04%Lamprell (LAM) 286.00p -3.51%Rotork (ROR) 1,903.00p -3.45%Dunelm Group (DNLM) 444.50p -3.39%Berendsen (BRSN) 432.60p -2.66%IG Group Holdings (IGG) 468.30p -2.62%Bwin.party Digital Entertainment (BPTY) 160.10p -2.50%JD Sports Fashion (JD.) 691.00p -2.26%Wood Group (John) (WG.) 673.50p -2.25%Berkeley Group Holdings (The) (BKG) 1,283.00p -2.21%