Uncertainty caused by the US fiscal cliff deadline yesterday quashed any celebrations over a near 6 per cent jump for the FTSE 100 index over 2012.
London’s final session of the year reflected growing expectations that US politicians will fail to reach an agreement before steep tax increases and spending cuts begin to take effect today.
Mike van Dulken, head of research at Accendo Markets, said: “Traditional end-of-year volatility has been given a helping hand this year with stubborn stateside politicians appearing to forget that the 2012 election is over and the fate of the nation’s economic growth is in their hands.”
The FTSE 100 index slipped 27.6 points to 5,897.8 as investors took their money off the table and ditched riskier stocks on fears the US economy will be driven back into recession by the unresolved budget negotiations. However, news from the US later suggested a deal would be reached. The benchmark index started the year at 5,572.3.
The more UK-focused FTSE 250 index enjoyed a record year, climbing more than 22 per cent on hopes that smaller, domestic firms will be the first to benefit from any turnaround in the fortunes of the UK economy.
There were just a handful of London’s blue-chip stocks in positive territory during a shortened final session of the year.
B&Q owner Kingfisher topped the risers board, up 2.2p to 284.1p, while defensive plays Imperial Tobacco and British American Tobacco also made gains, rising 8p to 2,373p and 12.5p to 3,121p respectively.
The fallers board featured Lloyds Banking Group after a fall of 0.8p to 47.9p.
However, it has been a decent year for the part-nationalised bank, with its shares up 85 per cent on hopes that it is closer to paying dividends again having reduced the risks on its balance sheet.
NEW YORK: Stocks extended gains, with the Nasdaq up 1 per cent on news that the majority of Senate Republicans are expected to support a tentative deal on the “fiscal cliff”.
The Dow Jones industrial average was up 82.99 points, or 0.64 per cent, at 13,021.10. The Standard & Poor’s 500 index was up 12.66 point at 1,415.09 and the Nasdaq Composite index was up 37.11 points at 2,997.43.