The London market took little cheer from positive economic growth figures in the United States as slipping metal prices weighed on mining stocks.
The US Bureau of Economic Analysis said GDP grew at an annualised rate of 3.2% between October and December, which was up on the annual rate of 2.6% in the previous quarter. The US economy grew by 2.9% in the whole of 2010, which is the strongest year of growth since 2005.
But in London the FTSE 100 Index closed 83.7 points down at 5881.4, hit by losses in the weighty mining sector as sliding metal prices saw Vedanta Resources lose 109p at 2291p, Anglo American slip 112p at 3031p and Rio Tinto drop 132.5p at 4281.5p.
The US figures strengthened the dollar, which was up against the pound at 1.58. However, sterling was up against the euro at 1.16.
A drop in oil prices saw the energy sector take a hit, with Essar Energy hitting the top of the fallers’ board, losing nearly 6% or 30.5p at 512.5p, while Petrofac shed 61p at 1551p and BG Group lost 58p at 1334p.
Sentiment was not helped by a gloomy consumer confidence survey from market research firm GfK NOP. The study revealed the biggest drop in consumer confidence in nearly 20 years between December and January as Britons faced up to the reality of higher VAT and public spending cuts.
Shares in TUI Travel dropped 4%, down 12.1p to 259.8p, after a downgrade by Deutsche Bank and as traders monitored the civil unrest in Egypt, one of the travel industry’s leading destinations.
Pubs and brewing group Marston’s saw its share price drop 1.5p to 102.3p after the company reported strong trading figures for Christmas and New Year. The 11.2% rise in the 12-day period helped the Tavern Table owner to offset the impact of snow disruption at the start of December, while its operating margin was slightly better than a year earlier.
Fellow pub company and brewer Fuller, Smith & Turner was down 3.5p at 616p despite reporting that sales of its own-brewed beers including London Pride returned to growth.
But it echoed the sentiments in the consumer confidence survey when it warned that customers’ spending power was likely to be squeezed by the Government’s austerity measures.