FTSE remains in the red as oil heavyweights falter

Lower crude oil prices and downbeat broker comments hit the likes of Royal Dutch Shell and BP, while a profit warning from France's Societe Generale frayed nerves over banking stocks.

The FTSE 100 Index was 25.23 points down to 5473.48 at the close, despite seeing early gains on Wall Street.

On the currency markets, the pound enjoyed a better day, nearing 1.63 dollars and passing above 1.12 euros as a Bank of England policymaker gave a strong hint that rates could soon move higher.

But equities struggled to get out of the blocks after Asian markets were rocked by Chinese moves to cool growth by forcing banks to hold more reserves.

There were further losses for oil giants after prices retreated below 80 US dollars a barrel to a year low on fears that the China move will dampen global prospects, while markets also reacted to a sharper than expected rise in US stockpiles.

Crude stocks, expected to rise 1.2 million barrels, increased by 3.7 million, the US Energy Information Administration said. Inventories of distillates, forecast to fall, rose by 1.4 million barrels.

"It's a bearish report that points back to weak underlying fundamentals in the domestic petroleum market," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

"Distillate stocks are up despite the cold weather last week, which means there was no demand for anything except the heating oil."

Shell – cut to underweight by brokers at Morgan Stanley – was a prominent faller, off 251/2p to 17981/2p or 1.5 per cent. Rival BP dropped 71/4p to 6265/8p, while BG Group was 6p cheaper at 1229p.

Meanwhile, SocGen spooked investors after saying it would make just a "slight" fourth-quarter profit after having to make hefty asset writedowns because of "contrasted signals" from the US property market.

This knocked several banks in London, with Barclays down 27/8p to 3133/4p and HSBC losing 103/4p to 7173/4p. Royal Bank of Scotland bucked the trend with a 7/8p rise to 355/8p on comments by boss Stephen Hester on the faster than expected progress made so far in turning around the part-nationalised bank.

Dairy Milk maker Cadbury was also on the front foot with a 121/2p rise to 7891/2p despite reports that Italian confectioner Ferrero had pulled out of a possible rival bid for the business.

But property firm British Land was another top-flight faller as the stock turned ex-dividend, meaning shareholders are not entitled to the latest payout.

Shares were down 75/8p to 466p.

In UK retail news, shares in high street baker Greggs were 10p lower at 405p after it announced a rise of 1.1 per cent in like-for-like sales for the four weeks to December 26.

Video games retailer Game Group edged higher in the FTSE 250 after Tuesday's 6 per cent fall following a profit warning. Shares were up 1/8p to 1001/8p.

Insulation firm SIG was the top riser in the FTSE 250 as the company held profits forecasts for 2009 despite tough markets and little clear prospect of recovery for the construction industry in 2010. Shares were rewarded with a 10 per cent rise, gaining 113/4p to stand at 1285/8p.

The biggest Footsie risers were Schroders ahead 35p to 1340p, RBS, Petrofac up 22p to 1006p and Admiral ahead 25p to 1163p.

The biggest fallers were Randgold Resources down 145p to 5035p, London Stock Exchange off 16p to 680p, Icap sliding 10p to 4293/4p, and Lonmin, down 42p to stand at 2027p.