FTSE flounders for second successive session on recovery fears

The FTSE 100 index is poised to make a second successive session of losses today with oil and utilities stocks falling out of favour. Wide scale concerns about the recovery of the global economy are having a stranglehold on blue-chip stocks with brokers urging more caution.

Global economy statistics have been poor recently with the two biggest economies, the US and China, reporting a slowdown in GPD growth and the UK and Japan also releasing slowing data. All in all, the slowdown has sent a shockwave of demand fears through global markets and the FTSE.

Global economy fears have ultimately hit high risk stocks and those dependent on exports to the east.

Banks, always avoided in times of global financial concerns, remain vulnerable today following Mervyn King’s announcement yesterday.

The Governor of the Bank of England warned that inflation is likely to remain above the two per cent target until the end of next year, but said the bank was willing to raise interest rates or end quantitative easing in order to prevent the “destructive” effects of high inflation.

HSBC Holdings (LON:HSBA) is the most significant heavyweight faller with a decline in share price of almost 0.5 per cent. Barclays (LON:BARC) and Royal Bank of Scotland (LON:RBS) shares are also in decline at the rate of around 0.3 per cent. However, Lloyds Banking Group (LON:LLOY) is current in positive territory amongst a select number of stock with gains of almost 0.8 per cent.

Oil stocks remained weak following Wednesday’s session as demand concerns continued to hamper the sector. Royal Dutch Shell (LON:RDSA) is posting share price declines in excess of one per cent.

Miners, also being avoided on a wide scale due to fears of slowing demand, are having a mixed session with Xstrata (LON:XTA) and Eurasian Natural Resources (LON:ENRC) posting the most significant losses – 1.2 per cent and 0.6 per cent respectively.

But at the other end of the scale, Kazakhmys (LON:KAZ) is regaining lost ground with a gain in share price of nearly 1.2 per cent.

BHP Billiton (LON:BLT) is also posting one per cent gains as the group goes in search of regulatory approval for its £25m hostile bid for Potash Corp before trying to win over the Canadian firm’s shareholders.

Insurers also peaked in the FTSE 100 fallers as stocks lost much of the gains they made on the back of continued speculation about potential consolidation in the sector. Standard Life (LON:SL) and Prudential (LON:PRU) are posting the biggest declines – 1.4 per cent and 1.2 per cent respectively.

The two standout stocks at the head of the FTSE 100’s losses are Inmarsat (LON:ISAT) and United Utilities (LON:UU).

Both groups were subject to broker downgrades with UBS downgrading British satellite firm Inmarsat to “neutral” from “buy”, dropping the share price 2.7 per cent lower.

And United Utilities received a downgrade to “neutral” from “overweight” from JPMorgan Cazenove – the broker said much of the positive news on the sector is already in the price.

The FTSE 100 is back underneath the 5,300 marker, shedding 13 points to drop 0.26 per cent to 5,289.13 at 10:55BST.

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