London close: Late bounce not enough, EU summit eyed

7th Dec 2011 16:46

The steady decline on the FTSE 100 since the morning proved too much, as a late bounce couldn't bring the blue chip index back into positive territory. Nevertheless, while the Footsie finished 22 points down it was still 45 points off its intraday low.Randgold Resources led the risers on Wednesday, gaining 3.5%. Mining peers Vedanta Resources, ENRC and Antofagasta were also higher. Resolution rose after Deutsche Bank upgraded the stock from hold to buy, while ICAP was among the fallers after Morgan Stanley downgraded its rating from overweight to equal weight. MIXED SPECULATION FROM THE EUROZONEStocks jumped higher from the off this morning as news of a proposal by European leaders to double the region's firepower against the crisis lifted sentiment. According to newspaper reports, the European Union is preparing a plan that would include the simultaneous running of two independent rescue funds along with larger financial support from the International Monetary Fund.The Financial Times said that leaders were working on a three-pronged proposal in order "to create a much bigger financial 'bazooka' to present at this week's European Union summit" on Thursday evening. Official sources cited by the daily say that the proposal would allow the existing €440bn fund, the European Financial Stability Facility (EFSF) to continue running when a new €500bn fund, the European Stability Mechanism (ESM), comes into effect in mid-2012. However, the early optimism seemed to fade by mid-morning with Bloomberg attributing the decline to remarks from a German government official to the effect that not all European Union members appreciate the seriousness of the situation.According to market analyst Michael Hewson from CMC Markets said: "Two bailout funds...does seem somewhat unlikely given that policymakers can't even fund the one they already have, namely the EFSF properly."ECB EXPECTED TO CUT RATESIn focus on Thursday will be the interest rate decisions from both the European Central Bank (ECB) and the Bank of England (BoE). With the BoE expected to freeze rates at 0.5% and leave its stimulus plans unchanged, an announcement by the ECB will likely take centre-stage given the severity of the current crisis in Europe, particularly as markets look ahead to the EU summit. Following Mario Draghi's debut as ECB President last month in which he lowered rates from 1.5% to 1.25%, markets are generally expecting a further 25 percentage point cut to 1%, back to the level which was held from May 2009 to April 2011. According to Bloomberg, the bank may also be drawing up plans to introduce a range of measure to stimulate bank lending. FTSE 250 MOVERS: KESA DOWN, MICRO FOCUS UP AFTER RESULTS After an initial rise, shares of KESA Electricals dropped to trade over 8% down by midday. The retailer's first half results were dragged down by Comet, its electrical chain it agreed to sell for just £2. Kesa posted a loss on its retail business of €9.2m, but a profit of €16.5m when Comet was stripped out. Micro Focus International, the business software company, was the high riser after announced a $134.4m cash return to shareholders. However, revenues on a constant currency basis dropped 2.6% in the six months to the end of October. Packaging and office products group DS Smith nudged higher after reporting a 26% rise in revenues from continuing operations in the first half ended 31 October. Bus and train operator Stagecoach rose despite reporting an 18% drop in half year pre-tax profit after a weak performance at its UK rail division. BCFTSE 100 - RisersRandgold Resources Ltd. (RRS) 6,945.00p +3.50%Tate & Lyle (TATE) 685.00p +2.24%Bunzl (BNZL) 843.00p +1.69%Vedanta Resources (VED) 1,099.00p +1.20%Cairn Energy (CNE) 277.80p +1.20%BAE Systems (BA.) 280.00p +1.19%Marks & Spencer Group (MKS) 318.00p +0.98%Eurasian Natural Resources Corp. (ENRC) 682.00p +0.89%National Grid (NG.) 609.50p +0.83%Burberry Group (BRBY) 1,277.00p +0.79%FTSE 100 - FallersICAP (IAP) 350.40p -4.39%Admiral Group (ADM) 855.50p -3.93%ARM Holdings (ARM) 575.00p -2.71%Kazakhmys (KAZ) 941.00p -2.39%Man Group (EMG) 139.80p -2.37%Petrofac Ltd. (PFC) 1,445.00p -2.10%Royal Bank of Scotland Group (RBS) 22.14p -1.99%Land Securities Group (LAND) 669.00p -1.83%Schroders (SDR) 1,367.00p -1.80%Sage Group (SGE) 288.60p -1.80%FTSE 250 - RisersStagecoach Group (SGC) 265.40p +6.76%Cable & Wireless Worldwide (CW.) 17.82p +5.76%Micro Focus International Plc (MCRO) 403.10p +5.66%Daejan Holdings (DJAN) 2,790.00p +5.40%Homeserve (HSV) 294.60p +4.54%Carillion (CLLN) 319.40p +4.24%Pace (PIC) 69.15p +3.67%SDL (SDL) 682.50p +3.10%Gem Diamonds Ltd. (DI) (GEMD) 200.50p +3.03%Afren (AFR) 89.05p +2.95%FTSE 250 - FallersKesa Electricals (KESA) 74.15p -9.24%Brown (N.) Group (BWNG) 247.60p -6.74%AZ Electronic Materials SA (WI) (AZEM) 236.00p -6.46%Debenhams (DEB) 59.85p -5.38%Electrocomponents (ECM) 196.10p -5.04%Kenmare Resources (KMR) 35.71p -3.93%Britvic (BVIC) 317.60p -3.70%Tullett Prebon (TLPR) 289.60p -3.47%Henderson Group (HGG) 114.10p -3.39%Talvivaara Mining Company (TALV) 239.30p -3.27%