Weaker Barclays stocks outweigh GlaxoSmithKline gains as Footsie dips

FTSE:5,772.99 (–2.32) Mid-250:11,636.16 (–18.76) Small Cap:3,254.07 (+4.93)

BRITAIN’S TOP share index closed marginally lower yesterday, as weakness in banks offset gains in defensive stocks with investors jostling positions ahead of a US interest rate decision.

London’s blue chip index closed down 2.32 points at 5,772.99, as cautious investors awaited the Federal Reserve’s assessment of the economy and any plans for dealing with renewed weakness.

Traders said there was hope that the Fed might hint at the introduction of some form of quantitative easing but expected interest rates to remain unchanged as the US economic recovery appears to be losing steam.

“Investors are looking for action but they might be disappointed,” Jimmy Yates, head of equities at CMC Markets, said.

In the UK, some members of the Bank of England’s monetary policy committee raised the possibility of future quantitative easing, as it judged the growth outlook had weakened, minutes of a June meeting showed.

British banks fell, having been among the top gainers on Tuesday ahead of the confidence vote in the Greek parliament, with Barclays shedding 2.6 per cent.

Having won the vote of confidence, Greece now faces the task of passing an austerity plan to secure a new bailout from the European Union and IMF, with no further newsflow about that due until next week.

Severn Trent and United Utilities fell as they traded without their payout attractions.

Cautious investors tucked into defensive stocks such as British American Tobacco and drug maker GlaxoSmithKline up 0.8 and 0.5 per cent, respectively.

Precious metals miner Randgold Resources increased 3 per cent as gold neared two-month highs. Investors turned to the metal’s safe haven qualities in the face of uncertainty over Greece and on expectations that government’s around the globe will continue their loose monetary policy.

Elsewhere, hedge fund manager Man rose 4.9 per cent, extending gains in the previous session on the back of a revival of vague takeover rumours, with a welter of positive broker comment supporting the stock.

Real-estate stocks rose, with British Land and Hammerson adding 1.4 per cent and 0.2 per cent respectively, as Espirito Santo initiated coverage on both with “buy” ratings. – (Reuters)