FTSE slips as US rates decision looms

The market slipped today after an initial rise in morning trading as investors anticipated tonight's interest rate decision by the US Federal Reserve. The FTSE 100 index fell 10.7 points to close at 5818.1, after disappointing results at Friends Provident and Scottish & Newcastle and an uncertain outlook for commercial broadcaster ITV.

Hopes that US rates would remain unchanged were reflected most strongly in banks, with Barclays up 3p to 633p. Shares in Lloyds TSB also rose by 1.5p to 521p, but Standard Chartered fell 36p to £12.74 as bad debt overshadowed an otherwise strong set of interim results. Chief executive Mervyn Davies also hinted that the bank was no longer in the bidding race for South Korea's biggest credit card provider, LG Card. He added that there were troubled times ahead for the world financial markets.

Profit concerns dragged shares in the brewer Scottish & Newcastle down 13.5p to 519p amid fears over its British margins, despite reporting a 12% rise in first-half pre-tax profits. Analysts worried that despite the World Cup and warm weather, profits were not as high as they could be. Profits were also a concern for insurer Friends Provident as it reported an expected 9% drop in first-half income despite beating forecasts for its sales, which were up 39%. Shares were down 6p to 175p. Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: "While the dividend yield and longer-term takeover hopes act to the positive, better opportunities elsewhere in the sector continue to see the shares tread water."

Oil prices did not help sentiment, as they hit another record on expectations that the US would draw in more oil imports to make up for the closure of BP's Prudhoe Bay oilfield in Alaska, announced on Monday. Prudhoe Bay is the largest oilfield in the US. London Brent crude rose 35 cents to a record $78.65 a barrel, a cent higher than Monday's $78.64, before dropping back in later trading. BP dropped even further. Shares in the oil major fell 13.5p to 614p on Monday and fell again yesterday to 613.77p, depriving BP of its place as the second-largest public oil company in the world to Royal Dutch Shell. Company executives have said the oilfield may not be reopened for months and some analysts lowered their recommendations on the group.

Dana Petroleum announced the start of production at its North Sea Goosander oilfield and shares rose accordingly. The UK-based oil and gas explorer and producer was the top gainer in the FTSE 250 - up 80p to £13. The group's oilfield, which it owns with Venture Production, is expected to produce up to 9,500 barrels a day with estimated oil reserves of 15.2m barrels. Venture Production was up 28.5p to 838p.

ITV slipped 3.25p to 98.25p after the chief executive, Charles Allen, announced he would step down. The finance director, John Cresswell, is to step into his role from October before a permanent replacement is found. Mr Allen has long been seen as a drag on the commercial television channel's share price and analysts expected such an announcement to help the shares. But a poor outlook for advertising revenue, which is expected to be announced today, weighed on the stock.

Brokers' notes helped to lift a few stocks. International Power rose 2.75p to 298.5p as JP Morgan increased its target price to 330p from 240p and reiterated its overweight rating, citing an improved outlook. The energy company reports its first-half results on Thursday. Cable & Wireless was up 2.75p to 120p after Citigroup lifted its rating from hold to buy and Rank Group rose 8.5p to 200.5p on an upgrading by UBS from neutral to buy.

The market bid farewell to Associated British Ports as its shares were suspended and a court sanctioned its £2.8bn takeover by a consortium led by Goldman Sachs. The group said its shares would cease to be listed on the exchange on 16 August.

On the small cap front, AIM-quoted mobile content firm Monstermob was up 14p to 70p after it confirmed it had received an approach which "may or may not lead to an offer being made for the company". Its shares have fallen steadily since January and analysts said it was a good takeover target as the price was low and it had a market-leading position in countries such as China.

Fireone Group, which provides payment services for online gambling companies, shot up 25p to 232.5p as it posted a 56% rise in first-half pre-tax profits to $19.6m.

And finally, AIM-quoted mining group Stratex International added 0.37p to 8.2p as it received further positive results from drilling at its gold project in southwest Turkey - the first gold discovery in the 21st century.