London close: Global outlook rattles stocks

18th Oct 2011 16:46

Worries over the global economy dominated the direction today, as the Footsie registered moderate gains, finishing around the 5,400 level. However, losses were not as pronounced as they were in intra-day trade - the FTSE 100 daily low was 5,351 - after a more positive, albeit flat, start on Wall Street.GLOBAL OUTLOOK RATTLES STOCKSEarly on, the mood was dampened by some worrying data from China. The economic powerhouse reported that gross domestic product (GDP) expanded by 9.1% in the third quarter, and while most countries would be ecstatic with such strong growth, the rate of increase had slowed down from the 9.5% rise seen the quarter before.Furthermore, comments from the German finance minister spooked investors in Europe today. Wolfgang Schaeuble said last night that European officials will not have the "definitive solution" to the Eurozone crisis markets were hoping for when they meet this weekend at the summit in Brussels. "Both last night's announcement in Germany and today's Chinese figures have given the market reason to take profits, after unbridled optimism took hold of traders since the beginning of October," said analyst Ben Taylor from spread-betting firm CMC Markets in London. "It now seems we will not get a resolution on a debt rescue plan by 23 October (as the market had expected) and China resilience to external issues is showing signs of weakness," he said.Also weighing on investors' minds was the news that ratings agency Moody's is putting the French government on so called "negative outlook" on its Aaa rating. Here in London, inflation jumped in September after a hike in utility prices, according to official figures. The Consumer Prices Index (CPI), the Government's preferred measure of inflation, rose to 5.2%, from 4.5% in August. This was higher than expected, with experts forecasting the figure would only reach 5%. MINERS PROVIDE A DRAG, G4S ATTEMPTS TO RECOVERUnsurprisingly, it was miners that bore the brunt of the selling amid concerns over global growth in the wake of the disappointing Chinese data. Rio Tinto, Vedanta Resources and Lonmin were among the worst performers of the day. Xstrata joined in with the fall after its third quarter statement. While thermal coal production hit a record, reduced alloy prices prompted the company to extend furnace maintenance programmes, resulting in lower ferrochrome production. G4S was the highest riser today after its +20% share price decline on Monday. The security solutions giant announced yesterday that it intends to create the world's largest security and facilities services group with the huge £5.2bn purchase of ISS. BP performed well as investors digested its recent $4bn settlement with US counterpart Anadarko in regards to the Deepwater Horizon rig explosion at the Macondo asset in the Gulf of Mexico. UBS raised its target price on the oil titan, saying that the deal is an "important step towards resolution".BC