FTSE 100 claws back morning losses

The FTSE 100 closed down 0.03 per cent today after making up morning losses.

The London index of top 100 shares closed down 1.60 points to 5,370.20.

After a ragtag day it was again the commodities that propped up London, almost punch drunk after recent beatings.

Tullow Oil rose 7.42 per cent, while energy services company John Wood rose 5.62 per cent.

Cairn Energy gained 5.08 per cent, Xstrata climbed 4.89 per cent and Kazakhmys rose 4.76 per cent.

Meanwhile Whitbread slipped 4.13 per cent, insurer Aviva dropped 4.00 per cent and Schroders fell 3.51 per cent.

British Airways and Carnival were down 3.64 per cent and 3.26 per cent on oil price concerns.

Ryan Kneale, market analyst at City bookmaker BetsForTraders.com, said: "Uncertainty rules the roost again today and the markets only go one way when there is uncertainty in the air, and that is down.

"Traders are currently contending with rising inflation, led by gains in commodity prices, slowing economic growth and the aftermath of years of over zealous lending, a recipe for disaster."

Inflation presently stands at 4.4 per cent, according to the latest consumer price index (CPI) from the Office for National Statistics (ONS).

Gains in London compared with early falls in New York, which over the last few days has dictated the direction of the FTSE 100.

The Dow Jones and Nasdaq were down 0.48 per cent and 0.93 per cent respectively as unease grows about the future of US mortgage kingpins Freddie Mac and Fannie Mae. Fears the US government may be forced to bail out have severely limited confidence in the future value of shares in the organisations.

"Growing anxiety in the US financial sector is causing constant nail-biting on both sides of the Atlantic," said Tim Hughes, head of sales trading at IG Index.

"With shares in Fannie Mae and Freddie Mac dropping to their lowest levels in almost 20 years, lack of confidence and negativity seems to pulsing out of the beleaguered sector.

"The positive news in the UK this afternoon may secure a better day's trading for the FTSE 100, but there are still question marks over whether this rally will fuel any lasting push above 5,400 by the end of the week."

Daniel Barnes