US gains can't lift FTSE out of red

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The FTSE 100 Index went down 22.5 points at 5986.5

Wall Street opened in a buoyant mood, but early gains in the US failed to lift the London market out of the red.

The Dow Jones Industrial Average in America gained more than 40 points soon after opening, with investors cheered by a spate of positive economic news in recent weeks.

However, the FTSE 100 Index in London is in negative territory – down 22.5 points at 5986.5 – with little corporate or economic developments to add direction.

The gains for the Dow, which was open yesterday while London remained shut for the bank holiday, came after it reached a 28-month high on Tuesday.

The FTSE 100 had also been soaring higher before Christmas, thanks to the so-called Santa rally.

The top tier closed above 6,000 for the first time since June 2008 on Christmas Eve as thin trading volumes and happy festive sentiment helped blue chips move higher.

Banks were among those responsible for pulling the Footsie back below the 6,000 level. Part-nationalised Royal Bank of Scotland dropped 0.9p to 39.8p, with taxpayer-backed counterpart Lloyds Banking Group not far behind, down 1.2p to 67.6p.

British Gas parent Centrica was the leading faller, however, off 2% or 7.6p to 334.7p.

Miners fought back from early session declines seen after China’s move to raise interest rates by a quarter point on Christmas Day. The hike was the second rise in just over two months as China – a major source of demand for mining products – stepped up its battle to curb soaring inflation.

The sector was helped by excitement over metal prices after gold saw its largest one-day gain since early November on Tuesday. Gold miners African Barrick Gold and Randgold Resources led the sector’s rebound, up 33p to 615p and 185p to 5450p respectively.

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