The FTSE 100 managed to record its best quarterly performance for two years, but the three months ended on a downbeat note as investors seized the opportunity to cash in some of their profits.
Tobacco shares were among the day’s main fallers. Reports that the US Federal Trade Commission wanted to block the $27bn merger between Lorillard and Reynolds hit Imperial Tobacco and British American Tobacco, who both stood to benefit if the deal went ahead.
Imperial, down 105p at £29.63, had agreed to spend around $7bn to buy a number of brands from the merged group, while BAT - which holds shares in Reynolds - had agreed to invest $4.7bn and keep a 42% stake in the joint entity. BAT fell 106p to 3488.5p.
So the FTSE 100 finished the day down 118.39 points at 6773.04., with worries about the lack of resolution over Greece’s problems, uncertainty over US interest rates and, closer to home, pre-election jitters after the campaign began in earnest on Monday.
But over the first quarter it rose 4.93%, its biggest increase since the three months to March 2013. During the course of the three months it also hit a new closing peak of 7037, just over a week ago.
European markets also performed well during the quarter, but badly on the day. The gains followed the European Central Bank’s decision to introduce - finally - quantitative easing in an attempt to boost the eurozone economy and combat the threat of deflation. The FTSEurofirst 300 rose almost 16% over the quarter, its best first quarter since 1998, while Germany’s Dax was the star performer, up 22%.
In the US it was a different story. The Dow Jones Industrial Average was down around 120 points by the time London closed, on course for just a small rise on the quarter, taking a breather after record breaking runs last year.
Alastair McCaig, market analyst at IG, said:
After such a bullish day’s trading [on Monday], the end of the first quarter looks to be triggering a little bit of profit-taking. The Dow has only added 0.75% year to date while the FTSE, weighed down by struggling commodity companies, has only fared slightly better returning 3.2%. The standout, when based in euros, has been the Dax as it started the day up by roughly 22%, the strongest first quarter seen in almost two decades. When viewed within the context of its performance year to date, German equity traders will probably be only too happy to give a little back today.
Elsewhere the oil price came under pressure, with Brent crude down nearly 2% at $55.81 ahead of a resolution to the nuclear talks with Iran which - if they end favourably - could see a new supply of oil hit world markets.
Meanwhile, new Chinese stimulus measures proved a disappointment, providing little support for the commodity sector. So Anglo American fell 48p to £10.12, and BHP Billiton lost 38.5p to 1473.5p.
There was also disappointment when Vancouver’s Teck Resources and Antofagasta, down 7p at 732.5p, denied reports they had plans to link up.
Meggitt fell 14.5p at 548.5p as Exane BNP Paribas began coverage of the engineering group with an underperform rating and 475p price target.
B&Q owner Kingfisher jumped to the top of the FTSE 100, up 15.8p to 380.6p as it announced plans to return £200m to shareholders and shut 60 underperforming UK stores.
Among the mid-caps, Mitie dropped nearly 6% to 276p after the outsourcing group said full year profits were likely to be lower than expected, due to cuts in local government spending on home care and social housing.
Findel fell 19.75p to 232.25p after the home shopping and educational supplies business said full year results would be ahead of last year but slightly below market expectations. It blamed a poor final quarter performance from its education division, with the prospect of further spending cuts per pupil whichever of the two main political parties gains control following the election.
Finally investment bank Daniel Stewart has soared an eye-watering 750% - up 1.5p to 1.7p after it emerged that Rob Terry, the former chairman of controversial company Quindell, had bought a 7.4% stake at prices ranging from 0.15p to 0.554p.
Earlier this year Daniel Stewart raised £1.52m to strengthen its balance sheet.
At their peak nine years ago the shares stood at 29p each.
