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FTSE LIVE: Shares in London wobble as bouyant US data fails to shift central bank fears

17.30 (CLOSE): A cautious reaction to downbeat economic data from the United States held back progress on the London market today as investor nerves continued to weigh on blue chips.

A weak report on US consumer confidence and worse-than-expected industrial production data saw the Dow Jones Industrial Average on Wall Street fall into the red in early trading, losing much of the 1 per cent gain seen the previous session.

The FTSE 100 Index in London narrowly held firm in positive territory, up 3.6 points at 6308.3, but eased back from earlier gains after the disappointing US figures, combined with concern over America's asset-buying programme ahead of next week's Federal Reserve meeting.

Drop: in Next fell by 35p to 4553p.

Speculation over the Fed meeting dominated the thoughts of traders amid questions about when policymakers will start to taper the central bank's quantitative easing programme.

Analysts think this may happen in September, but until then markets will continue to fret as they try to work out the impact of the eventual step-down in purchases.

This may mean further volatility for world markets, which have fallen back sharply after reaching multi-year highs in May.

The pound held on to recent gains against the US dollar and the euro as official figures showed a better-than-feared performance from the UK construction sector.

Output declined by 1.1 per cent year-on-year in April, but this was the smallest drop since the start of 2012. Sterling remained at 1.57 dollars and 1.18 euros.

Riskier stocks attracted some interest during an otherwise subdued session in London, with miner Glencore Xstrata leading the way up 9.8p to 315.9p.

Royal Bank of Scotland shares edged 1p higher to 316p despite Deutsche Bank joining other brokers in placing a sell recommendation on the stock due to uncertainty caused by Stephen Hester's departure as chief executive later this year.

Yesterday, analysts at Charles Stanley described Mr Hester's planned exit as a "damaging development" for the bank.

Banks were also in sharp focus for further rate-rigging misdemeanors as Singapore's central bank censured 20 groups for attempting to rig benchmark rates, including UK players RBS, Barclays and HSBC.

The banks were not fined, but were ordered to set aside a combined $9.7billion (£6.2billion) in extra reserves and to carry out internal changes.

HSBC fell 10.3p to 680.1p and Barclays edged 1.2p higher to 297.7p.

Water giant Severn Trent was also on the fallers board, down 25p to 1760p, as investors continued to depart the water stock in the wake of this week's failure to engage in talks with an overseas takeover consortium.

Fashion and homewares retailer Next was 35p lower at 4553p after weekly sales figures from John Lewis showed a 5.2 per cent drop in department store revenues, a figure distorted by comparisons with last year's extended Jubilee holidays.

The biggest FTSE 100 risers were Glencore Xstrata up 9.8p to 315.9p, Kingfisher 9.3p ahead to 352.1p, Randgold Resources 122p higher at 4881p and Aggreko 41p up at 1725p.

The biggest FTSE 100 fallers were HSBC down 10.3p to 680.1p, Severn Trent off 25p to 1760p, Tesco 3.4p lower at 336.5p and Royal Dutch Shell down 21p to 2160.5p.

16:30: Having briefly scaled the dizzying heights of 6334 this afternoon, the FTSE remains flat currently trading at 6305 barely 0.01 per cent higher than when it opened this morning.

Gains in the London market have been pegged back after US consumer sentiment retreated to 82.7 in June having hitting its highest in nearly six years in May, according to the Thomson Reuters/University of Michigan's preliminary reading. Economists had expected the level to hold at 84.5 this month.

The reading added to negative sentiment after the May inflation report showed US producer prices rose more than expected in May as petrol prices rebounded, with the producer price index gaining 0.5 per cent. Economists had expected a gain of 0.1 per cent.

Shares rally: shares in London continue their recovery on the back of better than expected US retail and jobs data

Adding to woes, the IMF said while underlying fundamentals in the US are gradually improving, the economy is still being restrained by government spending cuts and tax increases. The IMF revised its US growth outlook for 2014 down to 2.7 per cent, while maintaining the 2013 guidance at 1.9 per cent.

14:30

US stocks have slipped at the open with investors taking a breather following a sharp rally that propelled all three major averages by more than 1 per cent each, as concerns remained over whether central banks will pare back their stimulus programs.

The Dow Jones Industrial Average is 0.14 per cent, or 21.81 points, lower at 15,154.27.

Shares in London were flat in mid-afternoon trading a pinch higher by 0.10 per cent at 6310.9 as investor's nervously waited for US markets to open, as well as May inflation figures and consumer sentiment data to be released and give a sense of when the US Federal Reserve may begin to tapper off its $80bilion monthly bond buying programme

The May inflation report showed US producer prices rose more than expected in May as petrol prices rebounded, with the producer price index gaining 0.5 per cent. Economists had expected a gain of 0.1 per cent.

Industrial production was unchanged in May, according to the Federal Reserve, missing expectations for a gain of 0.2 per cent.

  More... FTSE CLOSE: Bad day at the office for RBS after Hester announcement, but Footsie breaks losing streak Get the latest market data Save every month and get the experts to pick your investments at a low-cost. Find out more at Killik.com

Speculation over next week's Fed meeting is dominating the thoughts of traders.

Analysts think this may happen in September but until then markets will continue to fret as they try to work out the impact of the eventual step-down in purchases.

This may mean further volatility for world markets, which have fallen back sharply after reaching multi-year highs in May.

Riskier stocks have attracted some interest during an otherwise subdued session in London, with miner Rio Tinto up 57p at 2817.5p, Glencore Xstrata 7.4p higher at 313.7p and Antofagasta ahead 24.75p to 916.75p, a rise of 3 per cent.

12:00

A much-needed lift from Wall Street has proved short-lived today as European markets resumed the recent pattern of uncertain trading.

Better-than-expected US retail sales and jobless claims soothed concerns about global economic prospects on Thursday after a sharp sell-off in Japanese stocks earlier in the session.

The Dow Jones Industrial Average closed more than 1 per cent higher last night but the FTSE 100 Index has failed to build on the gains retreating back into negative territory with a decline of 9.5 points to 6295.1.

Speculation over next week's Federal Reserve meeting is dominating the thoughts of traders amid questions about when policymakers will start to taper the central bank's quantitative easing programme.

Analysts think this may happen in September but until then markets will continue to fret as they try to work out the impact of the eventual step-down in purchases.

  More... FTSE CLOSE: Bad day at the office for RBS after Hester announcement, but Footsie breaks losing streak Get the latest market data Save every month and get the experts to pick your investments at a low-cost. Find out more at Killik.com

This may mean further volatility for world markets, which have fallen back sharply after reaching multi-year highs in May.

Riskier stocks have attracted some interest during an otherwise subdued session in London, with miner Rio Tinto up 57p at 2817.5p, Glencore Xstrata 7.4p higher at 313.7p and Antofagasta ahead 24.75p to 916.75p, a rise of 3 per cent.

Royal Bank of Scotland shares are slightly lower after Deutsche Bank joined other brokers in placing a sell recommendation on the stock due to uncertainty caused by Stephen Hester's departure as chief executive later this year.

Yesterday, banking analysts at Charles Stanley described Mr Hester's planned exit as a 'damaging development' for the bank.

Shares are 3.75p lower at 311.1p, having recovered from a 7 per cent fall at one stage yesterday to close down 3 per cent.

Fellow part-nationalised bank Lloyds Banking Group is a penny higher to 62.3p - above the break-even price for the Government's shareholding - but HSBC is down 8.4p to 682p and Standard Chartered  is 8p lower at 1450p. Barclays is 0.7p higher at 297.25p.

Other fallers include Severn Trent, which has dropped 22.5p to 1762.5p as investors continue to depart the water stock in the wake of this week's failure to engage in talks with an overseas takeover consortium.

Fashion and homewares retailer Next is 47.5p lower at 4540.5p after weekly sales figures from John Lewis showed a 5.2 per cent drop in department store revenues, a figure distorted by comparisons with last year's extended Jubilee holidays.

10:20am

The FTSE remains in positive territory this morning trading 35.82 points or 0.5 per cent higher at 6339.89 following positive sessions in Asia overnight and the US yesterday sparked by better than expected US retail sales and jobless claims figures.

Riskier stocks are back in favour this nmorning with miner Rio Tinto up 55p at 2814.5p and Glencore Xstrata 4.7p higher at 310.7p, a rise of 2 per cent.

Royal Bank of Scotland shares were steady, despite Deutsche Bank joining other brokers in placing a sell recommendation on the stock due to uncertainty caused by Stephen Hester's departure as chief executive later this year.

Shares were 0.15p higher at 315.15p, having recovered from a 7 per cent fall at one stage yesterday to close 3 per cent lower. Lloyds Banking Group was 1.1p higher at 62.5p and Barclays improved 3.5p to 300p. 

But analysts cautioned that markets remained volatile. Matt Basi, head of UK sales trading at CMC Markets UK, said: 'Popular opinion seems to be swaying back to the view that Fed tapering will be a drawn out process, and that any knee-jerk withdrawal of stimulus is highly unlikely.

 

'After finding themselves deserted as investors took risk off the table over the past fortnight, mining and property stocks find themselves in a relief rally this morning as bargain hunters step in to pick up the pieces.'

'At the other end of the FTSE RBS continues to look well offered as the news of Stephen Hester’s imminent departure weighs on the share price in the short term.

'Having been hired to run a bank and instead found himself the focus of intense political scrutiny – not to mention the public outcry every time he got paid – the news of Hester’s departure doesn’t come as a huge surprise. It will take a thick-skinned candidate to fancy taking on his role.'

08:00am (Open): Shares in London have opened in positive territory this morning tracking Asia overnight after better than expected US retail sales and jobless claims data helped support a mid-afternoon rally in equities and calm fears over central bank tapering of economic stimulus.

The FTSE is currently trading 0.27 per cent higher at 6321.5. Wall Street rallied more than 1 per cent yesterday on the data.

Asian shares rebounded from multi-month lows overnight on the data after what has been a bruising sell off in global markets, but investors remained anxious ahead of next week's Federal Reserve policy meeting.

Volatility was still high in currency markets, with the dollar at one point losing more than 1 per cent from early gains against the yen, and approached Thursday's four-month lows against a basket of six major currencies.

The better data appeared to bring some temporary relief to markets that have been rocked by uncertainty on whether the Fed would dial back its massive stimulus later this year. The U.S. central bank's huge bond-buying scheme has been the main source of rallies in broad risk assets.

Analysts expect markets to remain on edge ahead of the Fed meeting on June 18-19.

After yesterday's rally investors again be watching the US for further clues as to the health of the economy and the potential impact it may have on future stimulus measures. May inflation figures are due out at 1:30pm and sentiment data scheduled for release at 2:55pm

STOCKS TO WATCH:

ROYAL BANK OF SCOTLAND: The chairman of Royal Bank of Scotland Philip Hampton has signalled that he is likely to stand down soon in the latest upheaval involving the taxpayer-owned bank, according to various newspaper reports.

ASTRAZENECA: The British drugmaker is deepening its collaboration with academia by roping in more outside researchers to help to find new cancer drugs.

GLENCORE XSTRATA: The company has signed a new $17.3 billion revolving credit facility, to replace the pre-merger credit of Glencore and Xstrata and provide working capital.

FASTJET: The African budget airline backed by easyJet founder Stelios Haji-Ioannou, said on Friday it had been granted permission to launch international flights from Tanzania to South Africa, Zambia and Rwanda.

RETROSCREEN VIROLOGY: The firm is to raise 25.5 million pounds through placing a placing of 12,750,000 new ordinary Shares at a price of 200 pence.


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