Footsie declines on fears increasing oil prices will curtail economic growth

FTSE: 5,996.76 (–18.04) Mid-250: 11,652.41 (–75.25) Small Cap: 3,262.76 (–22.37): UK STOCKS declined yesterday, on concern that escalating unrest in Libya will push oil prices higher and curb economic growth.

The FTSE 100 Index sank 18.04, or 0.3 per cent, to 5,996.76 at the close in London, as three shares declined for every one that rose.

The three-day slide has pared this year’s gains to 1.6 per cent amid speculation that political instability in the Middle East will cause higher inflation, weakening the economic recovery and curbing earnings.

The FTSE All-Share Index lost 0.4 per cent.

“We are concerned the crisis may worsen,” said Ana Armstrong, chairman of Distinction Asset Management, which has about £180 million ($290 million) in client funds.

“Price rises may choke off anaemic growth in the West which in turn will put pressures on governments and central banks to further stoke inflationary fires through the printing of more money and extended zero interest rate policies,” he said.

Stocks tumbled as the market opened yesterday and oil rose to the highest price since September 2008, as soldiers deserted Libyan leader Muammar Gadafy’s government and the country’s deputy ambassador to the United Nations accused his government of “genocide”.

Equities recovered some of the losses as a government report in the US showed confidence among consumers rose in February to the highest level in three years as Americans became more optimistic about their incomes and the economy. The Conference Board’s index of sentiment increased to 70.4, the highest since February 2008, from 64.8 in January.

BAE Systems led declining shares on the FTSE 100, retreating 4.3 per cent to 326.8p.

Randgold Resources sank 2.3 per cent to 5,115p.

Royal Bank of Scotland gained 2.3 per cent to 47.72p.

BHP Billiton, the world’s largest mining company, climbed 1.6 per cent to 2,413p.

Croda International jumped 9.7 per cent to 1,639p. The UK supplier of sun-block agents to Procter and Gamble reported fourth-quarter operating profit of £49.4 million ($80 million).

Dragon Oil rose 3.3 per cent to 577p. The London-listed explorer focused on projects in Turkmenistan posted a 49 per cent jump in full-year profit to $386.1 million. – (Bloomberg/Reuters)