Festive FTSE rally grinds to a halt

A festive rally of blue-chip stocks ground to a halt after a six-day run that has left the top-flight on course for a 14% improvement in 2013.

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The FTSE 100 Index finished the day 19.6 points lower at 6731.3

A festive rally of blue-chip stocks ground to a halt after a six-day run that has left the top-flight on course for a 14% improvement in 2013.

There was little in the way of corporate news to drive new buying interest, as the FTSE 100 Index surrendered an initially positive start to finish the day 19.6 points lower at 6731.3.

Elsewhere, France's Cac 40 was flat while Germany's Dax drifted into the red. On Wall Street, the Dow Jones Industrial Average was little changed by the time of the close in London.

On currency markets, sterling was steady at 1.65 US dollars and 1.20 euros.

In London, the top-flight was led downwards by a clutch of retailers - amid investor nerves over the performance of the sector during the crucial Christmas period.

Sainsbury's led the fallers board, off nearly 2%, or 7.3p, at 371.1p, while Marks & Spencer slipped 7.5p to 442.7p and Sports Direct fell 11.5p to 717p.

Meanwhile British Airways and Iberia owner International Airlines Group, which has been the strongest top-flight performer in 2013, dipped 3.4p to 399p.

However at the close of the penultimate session before the end of the year, the FTSE 100 was more than 800 points stronger than its level of 5897.8 at the end of 2012. The final day's trading of the year will end at lunchtime.

Most commentators think that the record of 6930.2, set during the dotcom boom more than a decade ago, will be breached in 2014.

Prospects for major economies including the United States have been looking up, while low interest rates and yields on government bonds have encouraged investors to seek better returns in the stock market.

Other markets have outperformed the FTSE 100 Index, with Japan's Nikkei 225 index ending the trading year at its highest level in more than six years.

It surged by 56% during 2013 on renewed confidence in the country's economy after years of tepid growth.

The improved performance in Japan also reflects the impact of government spending initiatives and monetary policies aimed at boosting inflation.

The Dow Jones and S&P 500 on Wall Street and the Dax in Frankfurt have posted record highs over the Christmas period, helped by the removal of uncertainty over the US Federal Reserve's plans for ending its massive bond purchase programme.

Alpari market analyst Craig Erlam said: "January has historically been a good year for the markets, particularly in the last couple of years, which is what many see as the main reason for the Santa rally.

"It will be interesting to see if we'll see the same in 2014 in the face of Fed tapering. I imagine this will bring added importance to corporate earnings which have been somewhat overlooked thanks to the Fed's loose monetary policy."

The biggest FTSE 100 risers were Anglo American, up 29p to 1338.5p, Mondi up 16p to 1042p, Petrofac up 18p to 1220p and Frsenillo up 11p to 746p.

The biggest FTSE 100 fallers were Sainsbury's down 7.3p to 371.1p, Marks & Spencer down 7.5p to 442.7p, Sports Direct down 11.5p to 717p and Morrisons down 4p to 263.7p.