Markets Limp Lower on German Bond Auction

Markets briefly brought their eight-day losing streak to a close in the morning, but had fallen back by the close under the weight of Eurozone worries. Editors 24 November, 2011 | 5:30PM
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The German government bond auction, which saw waning demand for the country’s debt, was the latest worrying chapter in the saga of the debt crisis, but markets continue to expect bad news and as it was the FTSE 100 was down just 0.24% to 5,128.

Many of day’s gainers were in the retail sector, in spite of the latest UK GDP report, which showed retail growth flat for the third quarter. The overall report was mildly encouraging with GDP up 0.5%, but economists suggested that the detail of the report still pointed to a mild recession next year. The biggest contributors to growth were manufacturing and utility companies building up inventories.

Rising inventories can be a good or bad sign, but the data coincided with CBI survey results showing lower manufacturing orders.

Thomas Cook was the day’s strongest performer. Its shares rose 47% to 16.4p after press reports that one of the banks involved in its debt restructuring wanted to ensure the group remained a ‘growing concern’. However, this went only a small way to undoing the damage done to the share price on Tuesday, when it lost around three-quarters of its value.

Dixons reported a wider first-half loss, but it was not as bad as the markets had feared and the shares rose 7% to 10p. Debts had reduced and the group said it was ‘well-positioned’, albeit cautious for the second half of its financial year. Kesa was another of the day’s stronger performers as its same store sales fell less than expected. The news benefited some of the other weakened retailers such as SuperGroup and Mothercare.

On the FTSE 100, it was the unloved cyclicals that led the market with financials and miners up on the day. Moving down were the defensives, including pharmaceuticals, utilities and the oil majors.

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