- FTSE closes up 12.13 points at 6,766.77
- Attention on Iraq, FOMC
- Shire leads gains as miners weigh
techMARK 2,794.60 -0.09%
FTSE 100 6,766.77 +0.18%
FTSE 250 15,585.46 -0.77%
Blue chips recovered from a sharp dip earlier this afternoon to close in modestly positive territory, although concerns about Iraq continued to weigh, with investors also turning their attention to the latest Federal Open Market Committee (FOMC) meeting.
The FTSE 100 ended the day 12.13 points higher at 6,766.77.
David Madden, Market Analyst at IG, said: "As we get closer to the FOMC meeting, the market is becoming increasingly nervous, and the reactions to economic data correspondingly more severe. Today's weaker [US] housing data and stronger CPI gave a signal to move from equities for the day into the US dollar, prompting further weakness for equity markets.
"[...] Ahead of a big day for central banks tomorrow, the default position is prudence and hibernation, leaving the FTSE struggling around 6,760."
In Iraq, tensions continued to escalate as Sunni radicals moved south, although according to Credit Suisse, the situation "remains fluid". Last night, Barack Obama told Congress that he was deploying up to 275 military personnel to Iraq. The US president said the military personnel being sent to Iraq would provide support and security for the American embassy in Baghdad, but was "equipped for combat".
Today saw a step up in talks in a bid to establish greater stability, while in related news Foreign Secretary William Hague told Parliament the British embassy in Tehran is to re-open.
The latest FOMC meeting is expected to lead to additional tapering of asset purchases by the US central bank. Analysts predict the Fed will cut $10bn off monthly bond purchases and keep interest rates at 0.25%.
In the view of Capital Economics, "[while] the federal funds rate may still be around a year or so away, the question of how the bond market will react to the onset of tighter monetary policy is burning".
US consumer prices rose by 0.4% month-on-month in May, according to the Bureau of Labor Statistics, compared to expectations of an increase of 0.2%.
Elsewhere in the States, housing starts fell by 6.5% month-on-month in May to reach an annualised rate of 1.001m, below expectations of 1.033m.
UK house price rises in April raise spectre of lending clampdown
Back in Britain, house prices continued their upward march in April, piling pressure on Bank of England policymakers to clamp down on lending.
Prices increased 9.9% in the year to April, up from 8% in the year to March 2014, according to figures from the Office for National Statistics (ONS).
In other data released by the ONS, the consumer price index (CPI) fell sharply in May, with the rate of advance in prices slowing to a 1.5% year-on-year pace from 1.8% in the previous month, the lowest reading since May 2009.
The consensus estimate had been for a reading of 1.7%.
Shire soars on rumours of bid preparation
Pharmaceutical group Shire was making gains after Reuters reported that it has hired investment bank Citi as an advisor as it braces itself for takeover bids. The company's Irish tax base and its mid-sized market value of £22bn makes it a prime acquisition target, analysts told the news agency.
Morrison Supermarkets rose after it confirmed plans to slash 2,600 jobs as part of plans to reorganise and simplify its management structure. Having trialled the new structure on a small scale, the retail chain has decided to roll out the plan across the group. Chief Executive Dalton Philips said it was "the right time" to modernise the mangement of its stores.
Oil stock Tullow continued to rise amid the ongoing turmoil and violence spreading south in Iraq.
Insurer RSA was lifted by rumours it is looking to sell its Asian operations in an auction that could fetch up to $500m and draw a wide range of suitors.
Meanwhile, Ashtead engaged in a round of profit taking after the industrial rental group posted record profit for the year to April 30th, helping earnings beat expectations comfortably.
Kingfisher dropped after Oriel downgraded it from 'hold' to 'sell' with a target price of 350p, while CRH was downgraded to neutral by Exane.
FTSE 100 - Risers
Shire Plc (SHP) 3,660.00p +3.51%
Morrison (Wm) Supermarkets (MRW) 192.60p +2.28%
Whitbread (WTB) 4,259.00p +2.18%
Tullow Oil (TLW) 872.00p +1.81%
Lloyds Banking Group (LLOY) 77.99p +1.73%
RSA Insurance Group (RSA) 492.00p +1.67%
Barratt Developments (BDEV) 349.00p +1.51%
G4S (GFS) 259.80p +1.37%
Sainsbury (J) (SBRY) 321.90p +1.32%
Smiths Group (SMIN) 1,285.00p +1.26%
FTSE 100 - Fallers
Ashtead Group (AHT) 831.50p -6.26%
Kingfisher (KGF) 361.80p -2.19%
Royal Mail (RMG) 478.40p -2.11%
Friends Life Group Limited (FLG) 315.30p -2.02%
Petrofac Ltd. (PFC) 1,250.00p -1.42%
Sports Direct International (SPD) 765.50p -1.42%
St James's Place (STJ) 758.00p -1.30%
Weir Group (WEIR) 2,609.00p -1.25%
Land Securities Group (LAND) 1,020.00p -0.97%
Melrose Industries (MRO) 271.30p -0.95%
FTSE 250 - Risers
Kazakhmys (KAZ) 295.10p +3.91%
Crest Nicholson Holdings (CRST) 337.00p +3.69%
Infinis Energy (INFI) 221.80p +2.21%
Rightmove (RMV) 2,169.00p +1.59%
Ferrexpo (FXPO) 126.50p +1.52%
Redrow (RDW) 255.00p +1.43%
Entertainment One Limited (ETO) 303.30p +1.37%
Daejan Holdings (DJAN) 4,717.00p +1.07%
NMC Health (NMC) 445.60p +1.04%
Investec (INVP) 526.50p +0.96%
FTSE 250 - Fallers
Xaar (XAR) 537.00p -27.68%
Supergroup (SGP) 853.50p -5.69%
Workspace Group (WKP) 571.00p -5.23%
Grainger (GRI) 204.00p -4.98%
Big Yellow Group (BYG) 460.60p -4.80%
PayPoint (PAY) 1,086.00p -4.74%
Foxtons Group (FOXT) 278.00p -4.30%
St. Modwen Properties (SMP) 338.80p -4.21%
Cranswick (CWK) 1,223.00p -4.15%
esure Group (ESUR) 261.00p -4.11%