Euphoria surrounding President Barack Obama’s reelection fizzled out today as investors’ focus switched to the approaching “fiscal cliff” in the US.
The FTSE 100 Index lost earlier gains to stand 93.3 points lower at 5,791.6 as uncertainty settled in over how the president can avoid the so-called cliff – automatic tax increases and spending cuts which will likely tip the US back into recession.
In London’s top flight, Burberry shares lost hold of earlier gains despite beating City expectations with 6% growth in underlying half-year profits to £173million. The luxury fashion house’s shares dipped 53p to £11.99.
Outside the top flight, FirstGroup shares were 5% lower after it froze its half-year dividend at 7.62p as a result of uncertainty caused by the West Coast rail franchise fiasco, which has resulted in the UK Government putting all bids for new franchises on hold while it reviews the process. Shares were 10.4p lower at 194.9p, compared with more than 250p prior to the decision to cancel the West Coast bidding process.
The biggest Footsie risers were Associated British Foods up 9p at £13.74, Polymetal International ahead 4p at £11.15, RSA Insurance up 0.4p at 113.1p and Intercontinental Hotels ahead 5p at £15.50.
Among the biggest Footsie fallers were Randgold Resources down 475p at £69.50, CRH down 47p at £11.57 and BG Group off 42.5p at 1,054.5p.
Alan MacPhee, of investment manager and financial planning specialist Brewin Dolphin in Aberdeen, noted that Eland Oil and Gas rose 4% to close at 127.5p, with EnQuest up 1.02% at 119.5p.
The day’s fallers included Royal Bank of Scotland, down 2.71% at 272.6p.