Confusion was the dominating theme in the market yesterday, as rumours that today's eurozone summit had been cancelled sent the City into a tailspin. Although investors were reassured to find out it was actually the finance ministers who would no longer be getting together, while the summit between leaders would still take place, there was increasing despondency over the chances of a solution to the debt crisis being agreed by this evening.
The initial panic saw the FTSE 100 drop 1.5 per cent, and although it did manage a partial recovery, with terrible consumer confidence figures emerging from the US the top-tier index ended up closing 22.52 points lower at 5,525.54.
"It's like being in the washing machine on a spin-cycle," moaned one trader, sick of the volatility. "You come out all dizzy and don't know which way you're facing."
There was a growing belief in the Square Mile that the best to be hoped for from the summit today was a proposal, as some suggested that an agreement would not be possible without the presence of the countries' finance ministers.
With the blue-chip index having gained more than 12 per cent in the previous three weeks, hopes had seemingly been growing, although yesterday's slide confirmed traders' claims the rally had been fragile.
The heavyweight miners were particularly choppy, with Antofagasta dropping 26p to 1,152p, while Rio Tinto was knocked back 71p to 3,302.5p. Yet Randgold Resources benefited from investors rushing for the security of gold, as the yellow metal digger advanced 275p to 6,710p.
Xstrata also managed to buck the trend, creeping down a mere 1.5p to 1,014.5p. In addition to signs a strike by its South African workers could be nearing an end, the group was also helped by the return yet again of bid chatter.
Analysts from Jefferies said the familiar idea of its being swallowed up by Glencore was a "win-win" situation and calculated that the commodities trading giant – which fell 10.9p to 408p – could pay at least a 55 per cent premium for the miner before the deal became earnings dilutive.
In a busy day for results, Reckitt Benckiser slumped 116p to 3,330p despite the Cillit Bang owner beating forecasts and reporting a 16 per cent increase in third-quarter group sales.
At the other end, BP and BG impressed with their figures for the same period despite recent pessimism among analysts. Both oil giants managed to beat expectations and spurted up 19.1p to 457.2p and 51p to 1,378p respectively as a result.
Meanwhile, Royal Dutch Shell – whose turn to update the market comes tomorrow – slipped down 11.5p to 2,231p amid wild rumours it could be mulling over a possible move for the US refining giant Valero Energy.
Analysts were quick to dismiss the vague speculation, however, which also put forward India's Reliance Industries and China's CNOOC as other potential aggressors. They said that Shell would not be interested in such a move and pointed out that the current trend was actually for giant oil companies to spin-off their refining operations.
Kesa Electricals' rollercoaster week continued as the retailer plummeted 7.23 per cent to 102.6p on the FTSE 250.
The move came in the wake of its advancing nearly 17 per cent on Monday on the back of increasing confidence it would agree a sale of its struggling Comet chain.
However, Oriel Securities' Ben Hunt played the role of party pooper, saying that even if Kesa could sell the unit, he was still concerned about its Darty stores in France.
The analyst predicted "weaker French consumer confidence will start to impact earnings", adding that there were downside risks to its estimates as he reiterated his "reduce" advice.
Elsewhere, Moneysupermarket.com crept up 0.3p to 104.2p after takeover talk was revived once again. Altium said it believed the comparison website "could attract the attention of a bidder" as the broker upgraded its rating to "buy" following the company's recent slide.
Down on the small-cap index, Vectura was left looking rather sickly after investors learnt two of its major new lung drugs were facing significant delays.
The pharmaceuticals group dropped 20.59 per cent to 67.5p after the Swiss giant Novartis – its partner in the development of the NVA237 and QVA149 products – revealed regulators across the Atlantic had asked for further information before granting US approval.
The gossips returned to Gulf Keystone Petroleum yet again, with vague rumours suggesting the AIM-listed explorer could be about to unveil a large find.
Dealers were unimpressed, however, as the punters' favourite crept up by 2.25p to 136.5p, helped by Investec keeping its "buy" advice.Reuse content