FTSE retreats as energy stocks slide, Marks & Spencer drops

FTSE retreats as energy stocks slide, Marks & Spencer drops

London: Britain’s top share index fell 0.2% early on Wednesday, dented by weaker energy stocks and a decline in Marks and Spencer after a disappointing trading update. By 0859 GMT, the blue-chip FTSE 100 index was down 12.56 points at 5,509.94, after gaining 0.4% on Tuesday to set its highest close since 2 September 2008, the month when Lehman Brothers collapsed.

Energy stocks were the biggest drag on the index as a rally in crude prices faltered. BG Group, BP, Royal Dutch Shell and Cairn Energy fell between 0.7 and 0.9%.

The FTSE 100 has gained 59% since touching a six-year trough last March, but analysts were cautions on whether there is scope for further gains.

“I am wary about too much interest and am not entirely convinced about it, there’s a high degree of trepidation and investors are concerned about the removal of liquidity," said Jeremy Batstone-Carr, analyst at Charles Stanley, referring to Bank of England measures to boost the economy.

By next month, the Bank will have pumped £200 billion ($319.1 billion) into the British economy, but this will be withdrawn as the year proceeds.

M&S misses

Marks and Spencer fell 4.8% after it posted its first rise in quarterly underlying sales for over two years but missed analysts forecasts and joined rivals in warning of an uncertain 2010.

Elsewhere in the retail sector, Sainsbury was also under pressure, down 0.6% amid anxiety ahead of a trading update due on Thursday.

Emphasising crumpling confidence among UK shoppers, consumer confidence suffered its sharpest fall in over a year in December, according to a survey, even as separate figures showed both job placements and wages rose last month.

The Nationwide Building Society’s consumer confidence index fell to 69 from an upwardly revised 74 in November, after respondents sharply scaled back their expectations for the coming year.

Banks were the biggest support for the FTSE 100 as sentiment on the sector remained firm after sharp gains the previous session. Barclays, Royal Bank of Scotland and Lloyds Banking Group all gained.

Investors will be eyeing the CIPS Services PMI for December, scheduled for release at 0928 GMT.

Later in the session, US ADP National Employment figures for December, due at 1315 GMT, will be a focus, as investors look for clues on the closely watched non-farm payrolls data due for release on Friday.

ICAP and Burberry were in negative territory after going ex-dividend.