Shares fall amid eurozone fears and confusion around US Federal Reserve's attitude to more quantitative easing
Leading shares recorded their third successive weekly decline as eurozone fears continued to unsettle investors, and confusion surrounded the US Federal Reserve's attitude to providing a further boost to the world's largest economy.
With global markets closed for the Good Friday holiday, it was a short but volatile trading week.
The FTSE 100 finished Thursday with a 19.90 point rise to 5723.67, but over the week the index lost nearly 45 points or 0.77%. There was a 106 point surge on Monday following strong manufacturing data from China – which boosted mining shares – and the UK, and a precipitous 2% fall on Wednesday after a poorly received Spanish bond auction rekindled worries about the country meeting its budget targets.
On top of that, minutes from the US Federal Reserve's March meeting released late on Tuesday seemed to contradict chairman Ben Bernanke's earlier hints that more quantitative easing could be on the cards.
Thursday's revival came as investors put some money back on the table ahead of Friday's US non-farm payroll figures. In the event these came in lower than expected - a 120,000 rise compared to forecasts of around 205,000 - and sent US futures tumbling yesterday by about 137 points or 1% in curtailed Good Friday trading.
With Asian markets also ending lower, the FTSE 100 is on course for another tricky start next week, with the start of the US reporting season and economic data from China, including GDP, inflation and trade figures.
Mining shares bounced back from Wednesday's lows. Glencore International closed at 411.8p, up 22.4p, while Rio Tinto rose 53.5p to £34.60 and Anglo American added 29p to £22.98½. All three – with China's Sinopec – were suggested by speculators as possible predators for Canada's First Quantum Minerals, up 125p to £12.76 on Thursday.
Meanwhile analysts at Nomura suggested that Rio and BHP Billiton, up 30p at £19.07, could profitably merge their diamond businesses and float the resulting company on the stock market. The two mining groups have separately put their diamond assets up for sale, but Nomura said: "The rationale [for a merger and stock market launch] would be the creation of the largest listed diamond company with a solid asset base and lower overall sovereign risk. Investors might find this scenario an attractive alternative to the listed diamond producers Harry Winston, Petra Diamonds and Gem Diamonds." The company could be valued at between $2.1bn and $3.5bn, said the bank.
Elsewhere International Power, up 5.3p to 407.5p, was in demand on hopes that France's GDF Suez would have to increase its 390p a share offer for the 30% of the company it does not already own.
GDF's bid was rejected by International Power's independent directors and despite the French company suggesting one of its options was to walk away, investors are betting on a higher bid. UBS said: "We believe that there will be an agreement, but that the deal value is unlikely to exceed our 420p price target."
BSkyB was making the news as well as reporting it, with James Murdoch stepping down as chairman, and a day later the Sky news channel admitting it had hacked into emails on two occasions.
The revelation sent BSkyB's shares 22.5p lower to 635.5p, Thursday's biggest faller in the leading index.
Finally it was a good week for Lord Wolfson, chief executive of Next, up 30p at £29.67. He announced the shortlist for his economics prize on Wednesday, and on the same day raised £3.8m by cashing in 25,000 shares at £30.57 each. Analyst Simon Irwin at Liberum Capital said: "We would be strongly tempted to follow Wolfson's lead and sell."