London close: Stocks fall as 'fiscal cliff' deadline looms



LONDON (ShareCast) - Increasing optimism surrounding budget talks between US politicians may have helped the FTSE 100 (FTSE Index: EO100.FGI - news) come off its intraday low, but the index was stuck firmly in negative territory with markets remaining nervous ahead of the January 1st deadline.

Without a deal, the $600bn in automatic spending cuts and tax increases which come into effect are expected to pull the US economy back into recession.

House Speaker John Boehner, under increasing pressure to soften his opposition to raising taxes for the wealthy, made an offer over the weekend that proposed increasing taxes on those who earn over $1m. While the Obama administration declined the proposal - it wants higher taxes for those who take in more than $250,000 a year - the White House described the offer as "progress".

"It's like a game of chicken between President Barack Obama and House Speaker John Boehner. Both know they must soften their stance at some point if they are going to come to an agreement, but neither wants to do it first," said market analyst Craig Erlam from Alpari.

"Boehner has now tempted Obama in claiming he may be willing to allow tax breaks expire for millionaires in exchange for cuts to entitlements, however Obama is unlikely to go for it, instead sticking to his original demands of tax hikes on the top 2%. What it may do though is encourage Obama to offer something in return which is desperately needed if these talks are going to progress given that there's only two weeks until the deadline."

FTSE 100: Aggreko plummets on cautious outlook

Temporary power and temperature control solutions group Aggreko plummeted on Monday after giving a gloomy outlook for next year, saying that its performance would likely be lower than the 2012.

Investec downgraded its rating for the stock from 'buy' to 'hold' this morning, after the company said that comparators in 2013 will be tough owing to the one-off Olympics boost this year, lower Military revenues and uncertainty surrounding a contract with a Japanese client.

Telecoms group Vodafone (LSE: VOD.L - news) fell on back of concerns that operators in the Netherlands are paying too much to secure bandwidth. Dutch peer KPN (Amsterdam: KPN.AS - news) was forced to cancel its dividend this year and reduce its forecast payout for 2013 after spending a substantial amount more than expected in the Dutch 4G spectrum auction on Friday.

Leading the upside was IAG on the back of reports that its subsidiary British Airways has struck a deal with Ryanair to buy runway slots from Aer Lingus, as part of Ryanair's proposed takeover of the Irish airline.

The mining sector was putting in a decent performance today on the back of hopes for economic stimulus in Asian powerhouses China and Japan. According to Chinese news agency Xinhua, Beijing leaders said that they wanted to boost imports and increase urbanisation to boost domestic consumption. Meanwhile, the pro-stimulus Liberal Democratic Party celebrated a landslide victory in the Japanese elections this weekend. Resource (Shenzhen: 399319.SZ - news) peers Kazakhmys, Rio Tinto (Berlin: CRA1.BE - news) , Anglo American (LSE: AAL.L - news) and BHP Billiton were on the rise.

Oil titan BP has agreed to sell its interest in the Sean gas field in the UK North Sea to SSE for €288m in cash. Both stocks were in the red.

Global power systems company Rolls-Royce was out of favour despite winning a contract to supply waterjets for the Finnish navy's new high speeds landing craft.

Advertising giant WPP (LSE: WPP.L - news) fell after saying that it has agreed to acquire Filmworks China, an entertainment marketing agency in China, through its global media investment management arm GroupM.

FTSE 250 (FTSE: ^FTMC - news) : Centamin rebounds as gold exporting resumes

Egypt-focused gold mining and exporting company Centamin surged after confirming that the halt by customs on gold exports from Sukari has been lifted and a shipment was made on Sunday December 16th.

Centamin's shares took a battering last week when it said that it has been forced to suspend mining at its flagship Sukari mine after fuel supplies and gold export issues. The shares, up around 43p today, are still well below the 50-60p level seen over the past month, as investors await the resumption of mining at Sukari. Sector peers Ferrexpo, African Barrick Gold and New World Resources were making strong gains.

Imagination Technologies dropped after signing a revised agreement to acquire a $100m stake in MIPS Technologies (NasdaqGS: MIPS - news) , after its original $60m offer in November (Xetra: A0Z24E - news) triggered a bidding war with CEVA Inc (NasdaqGS: CEVA - news) .

Energy services group Hunting dropped after it said that it is trading in line with its expectations for the full year but cautioned that the short-term outlook is increasingly cautious due to tough market conditions in a number of its operating regions.

FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 179.50p +3.34%
Kazakhmys (LSE: KAZ.L - news) (KAZ) 782.50p +3.23%
Rio Tinto (RIO) 3,470.00p +2.36%
Evraz (EVR) 266.50p +1.83%
Anglo American (AAL) 1,856.50p +1.64%
BHP Billiton (BLT) 2,124.50p +1.41%
Admiral Group (LSE: ADM.L - news) (ADM) 1,151.00p +1.41%
Aberdeen Asset Management (ADN) 349.00p +1.31%
Vedanta Resources (LSE: VED.L - news) (VED) 1,115.00p +0.91%
Associated British Foods (ABF) 1,530.00p +0.79%

FTSE 100 - Fallers
Aggreko (AGK) 1,664.00p -21.69%
Wood Group (John) (WG.) 720.50p -1.84%
Vodafone Group (VOD) 158.20p -1.71%
British American Tobacco (BATS) 3,194.00p -1.57%
Bunzl (BNZL) 1,052.00p -1.22%
Rolls-Royce Holdings (RR.) 859.50p -1.21%
Weir Group (WEIR) 1,788.00p -1.05%
Capita (CPI) 755.00p -0.98%
GKN (GKN (LSE: GKN.L - news) ) 225.60p -0.92%
BG Group (LSE: BG.L - news) (BG.) 1,032.00p -0.91%

FTSE 250 - Risers
Centamin (DI) (CEY) 42.14p +21.65%
African Barrick Gold (ABG) 442.50p +4.86%
Sports Direct International (SPD) 381.20p +3.76%
Ferrexpo (FXPO) 243.00p +3.71%
Kier Group (KIE) 1,285.00p +2.80%
National Express Group (NEX) 195.50p +2.62%
Marston's (MARS) 123.30p +2.49%
Workspace Group (WKP) 312.90p +2.02%
Micro Focus International (MCRO) 559.50p +2.01%
Britvic (BVIC) 401.00p +1.88%

FTSE 250 - Fallers
Imagination Technologies Group (IMG) 383.50p -6.28%
Hunting (HTG) 757.50p -6.02%
Ruspetro (RPO) 78.35p -5.94% Digital Entertainment (BPTY) 108.30p -5.00%
Dialight (LSE: DIA.L - news) (DIA) 1,008.00p -3.17%
Ocado Group (OCDO) 77.50p -3.12%
PayPoint (PAY) 850.00p -3.02%
Betfair Group (BET) 723.00p -2.95%
Filtrona PLC (FLTR) 561.00p -2.86%
AZ Electronic Materials SA (DI) (AZEM) 344.20p -2.85%