The London market slumped today as record rises in oil prices and the US current account deficit combined with a profits warning from General Motors to shake confidence.
The FTSE 100 Index nearly doubled early losses during the afternoon to stand 62.6 points off at 4937.6 by the close.
The price of a barrel of US light crude climbed to an all-time high of $56.25 a barrel shortly after the session ended in London.
Analysts said concerns about oil supplies were likely to continue weighing on equities with today’s announcement of a 2% increase in Opec output being seen as largely inconsequential.
General Motors dismayed Wall Street by announcing it expected to make a first-quarter loss due to lower sales and price cutting.
The Dow Jones Industrial Average fell in sympathy, losing 86 points to 10659 shortly after London’s close.
Back in London, Chancellor Gordon Brown hailed the low inflation rate and strong growth as he unveiled a Budget that he claimed was designed to promote stability.
He doubled the point at which stamp duty is paid from £60,000 to £120,000, and also put a freeze on a range of taxes, including corporation tax, capital gains tax and air passenger duty.
Heavyweight oil firms BP and Shell both lost ground following the Opec announcement, slipping 6.5p and 4.25p to 560.5p and 488.75p, respectively.
A string of financial stocks were heavily in the red as they went ex-dividend, meaning investors no longer have the right to recent payments.
The biggest Footsie loser was Lloyds TSB, off 6% or 33.75p to 474.25p, while Royal & Sun Alliance weakened 3.5p to 80.75p and HBOS slipped 33p to 821.5p. Other firms going ex-dividend included tobacco firm Gallaher, falling 29p to 752.5p.
Smiths Group was also among the Footsie fallers, off 12p at 830p, despite raising its interim dividend by 6%.
After benefiting from the Opec decision and potential relief from higher fuel costs, British Airways lost 5.75p to 266.5p.
However, BAE Systems bounced 3.5p to 255.5p after extra defence spending was unveiled in the Budget.
In the FTSE 250 Index, property developer Crest Nicholson leapt nearly 10% or 37.25p to 434p after rejecting a preliminary takeover approach from its biggest shareholder as too low. Crest’s rivals also benefited, with Barratt Developments adding 25p to 661p and Bellway up 31p at 894p.
Entertainment group Chorion advanced 6% or 20p to 331p after reporting a 35% hike in annual profits.
Lender Provident Financial lifted 32p to 710p as a hike in foreign lending helped offset tough conditions in the UK credit sector and contributed to a 7% rise in profits to £220.7m.
But newspaper publisher Johnston Press retreated 22p to 541p despite celebrating an 18% rise in profits after seeing revenues grow by more than expected during 2004.
Retailer Peacock soared nearly 17%, or 41p, to 289p, after revealing that it had received a takeover approach.
Biggest risers were BAE Systems, up 3.5p to 255.5p, Anglo American lifting 14p to 1268p, Scottish & Newcastle adding 5p to 459p and Tate & Lyle gaining 5.5p to 535.25p.
Biggest losers were Lloyds TSB, off 33.75p at 474.25p, Royal & Sun Alliance drifting 3.5p to 80.75p, HBOS weakening 33p to 821.5p and Gallaher off 29p to 752.5p.
References: EGi News 16/03/05
