Global political unrest hits FTSE

London’s FTSE 100 Index slipped into the red on concerns over global political unrest and moves to curb inflation in China.

Banks and miners proved the biggest drag on the top tier, but gains on Wall Street helped the Footsie pull back from steeper losses seen earlier in the session – closing down 4.4 points to 6083.

America’s Dow Jones Industrial Average shook off uncertainty surrounding political troubles in the Middle East and North Africa to settle in positive territory.

But in London, investors were hesitant as the anti-government protests continued and while finance leaders assembled at a G20 meeting in Paris to discuss global economic issues.

Elsewhere, China’s central bank said it will raise banks’ reserve-requirement – the second increase this year – to withdraw excess liquidity from the economy and curb inflation. This raised fears over Chinese demand for raw materials, which combined with depressed copper prices to hit mining stocks.

In currency news, sterling strengthened further as speculation grew that one more member of the Bank of England’s rate-setting committee may have voted to raise rates at this month’s meeting. The pound rose to 1.62 US dollars and 1.19 euros.

Petrofac led mining sector declines after the Chinese news, down 69p to 1444p, followed by Rio Tinto off 101.5p at 4397p.

However, safe-haven gold was in demand – helping African Barrick Gold move 4% higher, up 21p to 571.5p.

Shareholders also moved to lock-in recent bank profits, with Barclays down 4p to 329.6p, part-nationalised Royal Bank of Scotland off 0.5p to 48.5p and HSBC 8.1p lower at 722.8p.

Water groups Severn Trent and United Utilities were enjoying better fortunes – up 17p to 1471p and 7p to 594.5p respectively – after broker Goldman Sachs upgraded stocks in the sector. Their second tier counterpart Northumbrian Water also benefited with an 11p gain to 326.1p.