FTSE CLOSE: Footsie flat after retreating from new trading peak as miners see profit taking; US stocks up

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17.35: The FTSE 100 closed 6.02 points lower at 6940.64 in a sizeable comedown from today's fresh all-time trading peak of 6,974.26.

The mining sector undermined earlier gains as investors digested the implications of an interest rate cut in China, the world's biggest commodities buyer.

Eurozone deflation and unemployment data proved more benign than expected, offering some relief from that quarter following the drama of the latest Greek debt crisis.

US stocks opened higher, rallying after falls in the previous session following weaker than expected US GDP growth data on Friday as investors assessed a more positive batch of economic data

'The FTSE 100 just couldn't hold on to the early gains as the losses from the mining sector became too much to bear,' said David Madden of IG.

'Natural resource stocks initially jumped on the back of the Chinese rate cut announcement, but anxiety set in as to why Beijing needs to loosen rates in the first place.'

Tony Cross of Trustnet Direct said: 'The FTSE 100 may have found its way up to fresh all time highs earlier this morning but the 7,000 level remains elusive and the index has wrapped up the first session of March just a shade into negative territory.

'There may well be an argument to say we should have seen a stronger finish in London after downbeat data from the US once again served to reinforce the dovish attitude at the Fed, but with more high profile economic data from Washington due in the coming days, there’s arguably a degree of sitting on hands happening here.'

Royal Dutch Shell was down 46p at 2159.5p, BHP Billiton was 21p lower at 1595.5p and Tullow fell 30p and 357.3p.

Barclays was on the front foot as shares recovered from weakness seen on Friday to rally by 5.85p to 262.75p ahead of annual results tomorrow.

Testing services firm Intertek was the biggest riser in the FTSE 100 after it increased its full-year dividend by 6.7 per cent and said it expects growth rates to improve this year, despite tough conditions in the oil and gas sector. Its shares surged more than 1 per cent or 32p to 2562p.

Marks & Spencer is to close five stores in China and shrink its Shanghai head office as part of a strategic shake-up that will leave the retailer with 10 stores in the region. Shares lifted 5.5p to 510p.

Shares in engineering conglomerate Smiths Group improved 15p to 1170p after a broker's note from Deutsche Bank said the firm's recent share price weakness looked to be unwarranted.

It said that although the business has been impacted by management departures and a lack of portfolio activity, it has a record of margin resilience and free cash flow generation.

Outside the top flight, shares in chocolate retailer Thorntons fell by more than 5 per cent after it failed to pay an interim dividend for the fourth year in a row.

Profits before tax and exceptional items fell to £6.5million for the 28 weeks to January 10 as sales dipped 8.2 per cent to £128.2million. The shares fell 4p to 69p.

The pound was down against the euro at €1.37, as inflation in the 19-bloc eurozone fell by less than anticipated. Sterling was also down against the US dollar at $1.54.

The biggest risers on the FTSE 100 Index were Royal Bank of Scotland up 11.1p at 378.3p, Hargreaves Lansdown up 30p at 1160p, Barclays up 5.85p at 262.75p and British Land up 16.5p and 845p.

The biggest fallers on the FTSE 100 Index were Tullow Oil down 30p at 357.3p, Shire down 115p at 5160p, Royal Dutch Shell down 46p at 2159.5p and Aggreko down 28p at 1680p.

16.56: The FTSE 100 closed down 6.02 points at 6940.64. More to come. 

15.00: The Footsie stayed weak in late afternoon trade having set a new all-time high early in the session, weighed by some profit taking in heavyweight commodity stocks and ignoring a strong opening performance by US stocks following some upbeat data.

With an hour and a half of trading to go in London, the FTSE 100 index was 16.1 points lower at 6,930.5, well below the day’s fresh all-time peak of 6,974.26 which topped last week’s move to snap a 15 year record.

Tullow Oil was the biggest blue chip casualty, losing over 6 per cent or 24.0p at 363.3p on expectations that the stock will be relegated from the FTSE 100 at this week’s quarterly index review, with Hikma Pharmaceuticals expected to take its place.

The oil explorer, like the sector, has been badly hit by the slide in the price of Brent crude from a peak of $115 a dollar last June to just above $61 a barrel today.

However, without Tullow some analysts think the UK blue chip index could become slightly less volatile.

Kathleen Brooks, research director UK EMEA at FOREX.com said: ‘One reason for volatility in the FTSE 100 has been its sensitivity to the energy sector, which makes up nearly 15 per cent of the entire index.

‘Tullow may be the smallest of the five energy companies listed on the FTSE 100, however the 60 per cent drop in its share price since May 2014 has undoubtedly weighed on the sector, and thus the index.’

She added: ‘Even without Tullow, the energy sector will still have a sizeable weighting in the FTSE 100, however, the fact that Tullow is being replaced by a pharma company is worth noting as pharma is considered less volatile than the energy sector. ‘

Brooks pointed out that, currently, healthcare makes up less than 10 per cent of the FTSE 100 and Hikma will still be fairly small within the pharma sector ‘meaning the change is unlikely to boost the FTSE 100’s stability overnight.’

However, she said: ‘Instead, it could mark a structural shift that could impact the FTSE in the coming quarters. As energy companies come under more scrutiny from regulators and a volatile oil price, their weighting in the FTSE could come under pressure. In contrast, sectors with more stable earning streams, like healthcare, could benefit.’

In early trade on Wall Street, the blue chip Dow Jones Industrial Average jumped 110.7 points higher to 18,243.4, while the broader S&P 500 gained 8.0 points at 2,112.4, and the tech-laden Nasdaq Composite gained 34.0 points at 4,997.5.

US stocks opened higher, rallying after falls in the previous session following weaker than expected US GDP growth data on Friday as investors assessed a more positive batch of economic data.

The final reading of US manufacturing conditions in February was revised up to a relatively strong 55.1 from a preliminary 54.3 reading, research firm Markit. The index registered 53.9 in January, with readings over 50 indicating growth.

Meanwhile the Institute for Supply Management's manufacturing index edged down to a reading of 52.9 per cent, from 53.5 per cent in January, but that was above a forecast of 52.8 per cent.

Earlier data showed US consumer spending dropped in January to record a second straight monthly fall for the first time since early 2009, as Americans paid less for fuel and increased their savings.

Consumer spending dropped a seasonally adjusted 0.2 personal, while personal income rose 0.3 per cent in January. Economists had forecast a 0.1 per cent decrease in spending and a 0.4 per cent gain in income. Inflation as gauged by the Federal Reserve’s favourite PCE price index decreased by 0.5 per cent in January.

13.15: The Footsie was in reverse at lunchtime, dropping back after touching a new intraday peak in morning trade as miners fell back on profit taking after initial gains made on developments in the Chinese economy.

By mid session, the FTSE 100 index was down 16.6 points or 0.2 per cent at 6,930.0, retreating from its fresh all-time high of 6,974.26 which topped last week’s 15 year peak.

European markets were also weak, with the CAC 40 index in Paris down 0.9 per cent, while Frankfurt’s Dax 30 index lost 0.3 per cent despite some brighter news for the Eurozone economy today.

Retreat: Footise fell back after touching a new intraday peak in morning trade as miners reversed on profit taking after initial gains made on developments in the Chinese economy

Eurozone consumer prices fell by less than expected in February while unemployment eased in January for the third month in a row, offering signs that the risks of economic stagnation and deflation in the bloc are falling.

Eurostat estimated that consumer prices in the 19 countries sharing the euro fell 0.3 per cent year-on-year in February after a 0.6 per cent annual drop in the previous month. Economists polled by Reuters had expected a 0.4 per cent price decline.

Unemployment, usually the last indicator to react to better economic conditions, fell for the third month in a row to 11.2 per cent in January from 11.3 per cent in December.

Howard Archer, chief European and UK economist at IHS Global Insight said: ‘A double dose of good news for the euro zone. This may dilute fears that pervasive deflation could become entrenched in the euro zone with long-term debilitating growth effects.’

He added: ‘The further drop in unemployment should be supportive to euro zone consumers and they are benefiting from the boost to their purchasing power coming from deflation.

On currency markets, the euro was firmer against the dollar and the pound on the inflation good news.

After hitting fresh seven year highs versus the euro last week, the pound retreated back to 1.37 today. Sterling was also down against the dollar, at 1.54 after weak mixed UK economic data, with another fall in house prices in February, according to mortgage lender Nationwide, countered by a stronger than expected UK manufacturing PMI from Markit.

The top FTSE 100 faller was explorer Tullow Oil, down over 6 per cent or 24.7p to 362.6p on worries about the implications of a dispute over the maritime border between Ghana and Ivory Coast.

While Tullow Oil said a project in the disputed region remained on schedule, it added that Ivorian authorities have applied for measures that could mean Ghana is asked to suspend exploration there.

Tullow’s fall came ahead of its likely relegation from the blue chip index when the results of the latest quarterly index review are announced this week, with Hikma Pharmaceuticals in pole position to move up from the FTSE 250 index to replace it.

Testing services firm Intertek was the biggest riser in the FTSE 100 after it increased its full-year dividend by 6.7 per cent and said it expects growth rates to improve this year, despite tough conditions in the oil and gas sector. Intertek shares surged almost 4 per cent or 92p to 2623p.

In other news, retailer Marks & Spencer is to close five stores in China and shrink its Shanghai head office as part of a strategic shake-up that will leave the firm with 10 stores in a strategic shake up of the region region. M&S shares were up 5.0p to 509.5p.

Shares in engineering conglomerate Smiths Group gained 7p to 1,162p after broker Deutsche Bank said the firm's recent share price weakness looked to be unwarranted.

Deutsche said that although the business has been impacted by management departures and a lack of portfolio activity, it has a record of margin resilience and free cash flow generation.

And shares in property firm British Land added 12.5p to 841.0p after it said it bought Surrey Quays leisure park in for £135million to boost its presence in the Canary Wharf area. Peer Land Securities was also higher, up 18p to 1,274p. 

10.15: Strength in heavyweight mining stocks after China's central bank cut interest rates for the second time in three months on Saturday helped the Footsie set a new record high above 6,970 this morning, breaking through last week's 15-year peak.

By mid morning, the FTSE 100 index was just below that 6,974.26 intraday record, up 25.8 points at 6,972.4. The index has now gained around 6 per cent since the start of 2015 moving slowly up towards the uncharted 7,000 level.

European markets stayed mixed, with the CAC 40 index in Paris down 0.2 per cent but Frankfurt’s Dax 30 index up 0.3 per cent as euro zone manufacturing data remained lacklustre in February.

Heavyweight lift: Mining stocks were boosted after interest rates in China, the world's biggest consumer of metals were cut by a quarter point for the second time in three months

Markit’s eurozone manufacturing purchasing managers' index for February reached 51 - down from a 51.1 flash reading published last month and unchanged from January's outcome of 51.

UK manufacturing growth, however, hit a seven-month high in February, according to a separate survey from Markit, adding to signs that Britain's economy started 2015 on a strong footing, albeit one based mostly on domestic demand as Europe continues to struggle.

The latest Markit/CIPS UK manufacturing PMI rose by a full point to 54.1 in February from an upwardly revised January reading. That was higher than all forecasts in a Reuters poll and comfortably above the 50 mark denoting growth.

The PMI report suggested British manufacturing output is growing at a quarterly rate of around 0.5 per cent, compared with a 0.2 per cent expansion in the final three months of 2014.

And as UK manufacturing looks to be improving, the recent slowdown in Britain’s housing market may also be starting to fade, with data from the Bank of England today showing mortgage approvals edged up in January to show their second monthly increase.

Mortgage approvals for house purchases numbered 60,786 in January, edging up from 60,349 in December to hit the highest level since September of last year. Analysts in a Reuters poll had forecast 61,000 mortgage approvals were made in January.

Tighter rules on mortgage lending took effect last year, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans.

The number of approvals fell in most months last year, cooling house price growth and easing concerns about a bubble in the housing market.

Earlier on today, mortgage lender Nationwide said house prices rose at the slowest annual pace since September 2013, increasing by 5.7 per cent in February.

Howard Archer, chief UK and European economist at IHS Global said: ‘We suspect that the weakening of housing market activity has now bottomed out and we see it picking up to a limited extent as 2015 progresses.

‘This suspicion is reinforced by the second successive rise in mortgage approvals for house purchases in January reported by the Bank of England.’

He added that ‘the fact that mortgage approvals continued to fall through to November - after lenders got to grips with the new mortgage regulations - pointed to a clear underlying moderation in housing market activity.’

On currency markets, the pound was weaker today, retreating from a seven-year high against the euro to hit 1.3756 and an eight-week peak against the dollar to reach 1.5411 as the weak Nationwide house prices data and May's potentially unsettling general election clouded the outlook for the UK currency.

For equities, mining stocks were boosted after interest rates in China, the world's biggest consumer of metals were cut by a quarter point for the second time in three months.

The latest move by the People’s Bank of China came after contrasting reports on Chinese manufacturing activity in February.

The private sector HSBC/Markit report and the official government PMIs both came in ahead of expectations, though the latter continued to signal a contraction in conditions for China’s factory sector.

The Chinese rate cut lifted metal prices, helping Anglo American gain 21p at 1.231p, while commodities trader Glencore, up 5.5p to 305.7p got a further boost after Credit Suisse raised its rating to outperform from neutral.

Banking stocks were also in demand led by Royal Bank of Scotland, up 10.6p to 377.8p, which rebounded after a weak showing last week following poorly-received annual results.

Barclays was also on the front foot as shares recovered from weakness seen on Friday to rally by 5.6p to 262.5p ahead of annual results tomorrow.

Testing services firm Intertek was the biggest riser in the FTSE 100 after it posted results today, with investors pleased by a 6.7 per cent hike in its full year dividend and comments that the group expects growth rates to improve this year, despite tough conditions in the oil and gas sector. Intertek shares jumped 3 per cent or 88p higher to 2618p.

But on the downside, oil stocks were weaker as crude prices weakened again with Brent down 1 per cent to around $62 a barrel. Tullow Oil was the top FTSE 100 faller, down 6.0p at 381.3p, while Royal Dutch Shell fell 8p to 2,110p.

Fund manager Aberdeen Asset was also a blue chip faller, down 0.3p at 468.3p broker JPMorgan Cazenove downgraded its rating to neutral.

Outside the top flight, shares in chocolate retailer Thorntons fell 2 per cent or 1.75p to 71.25p after it failed to pay an interim dividend for the fourth year in a row.

Profits before tax and exceptional items fell to £6.5million for the 28 weeks to January 10 as sales dropped 8.2 per cent to £128.2million.

Thornton’s chief executive Jonathan Hart told investors: ‘The difficult trading conditions in our UK commercial channel have persisted into the second half.’ 

08:25: The Footsie was higher in early morning deals, boosted by China's decision over the weekend to cut interest rates and after manufacturing data from the world's second largest economy came in much stronger than forecast for February.

The FTSE 100 index pushed ahead in opening deals, adding 13.0 points at 6,960.1, having closed 3.0 points lower on Friday albeit after touching another record intraday high at 6,967.2

European markets were mixed ahead of key eurozone PMI data and unemployment releases later today, with Germany's Dax 30 index up 0.3 per cent, but France's CAC 40 down 0.1 per cent.

Underperforming: British house prices rose by the smallest annual amount since September 2013 in February, after the first monthly drop in house prices in five months, figures from mortgage lender Nationwide showed

Overnight shares in China were buoyed by the mainland's central bank unexpectedly cutting interest rates at the weekend for the second time since November. 

it reduced its headline rate by 0.25 per cent to 5.35 per cent as it seeks to engineer a soft landing for China's slowing economy, against a backdrop of falling prices. 

The rate cut came just before official factory activity data for China was released on Sunday. February's purchasing manager's index data, which came in at 49.9, was better than analysts' expectations of 49.7.

UK interest rate factors will be to the fore this week, with the Bank of England's latest monetary policy decision due on Thursday although no change is still expected from the current record low level of 0.5 per cent until probably next year.

This expectation was reinforced this morning by the latest Nationwide UK house price survey which revealed a fall of 0.1 per cent in February, the first decline in five months since September. That brought the annual rate of price rises to 5.7 per cent compared with 6.8 per cent in January - a sharper than expected slowdown.

Later this morning Bank of England lending data for January will be unveiled, together with Markit's UK February manufacturing purchasing managers report - both due at 09:30am. 

In Europe, February manufacturing PMI numbers will also be released for Spain, Germany, Italy and France.

They are expected to confirm that Spain and Germany continue to outperform with numbers of 55.2 and 50.9, while Italy and France continue to struggle with readings of 50 and 47.7 respectively.

Meanwhile Greece continues to loom in the back of investors minds. Of particular concern is how it intends to fund itself in the weeks between now and June after its bailout extension was approved in the German parliament on Friday. 

Michael Hewson, at CMC Markets, said: 'The Greek government still needs to implement a number of reforms and will need to make up to €4billion of loan repayments by the end of this month, money that it currently does not appear to have.'

Stocks to watch: 

IAG - The airline is to make concrete proposals to the Irish government next week to try and convince it to sell its 25 per cent stake in Aer Lingus.

GLAXOSMITHKLINE - The drug maker and Novartis said they had completed a series of asset swaps worth more than $20billion that will reshape both drugmakers.

INTERTEK - The British product-testing firm posted a 2.3 per cent rise in full-year revenue, at constant currency, helped by demand for testing in the textile, electrical and building products sectors.

THORNTONS - The chocolate maker has posted lower first half sales and profits. 

TRINITY MIRROR - The newspaper group said it would pay a dividend for the first time since 2008 after tight cost control and digital advertising sales helped the firm to stem the rate of revenue decline.

AFREN - The oil and gas company said it had deferred a debt payment and was continuing talks with bondholders.

KELLER - The ground engineering contractor, posted a 15 per cent rise in full year pretax profit, helped by a gradual recovery in the United States, its largest market by revenue.

HISCOX - The Lloyd's of London underwriter reported a 5.5 per cent drop in full-year pretax profit as fierce competition and fewer catastrophes dragged on insurance and reinsurance prices.

 BHP BILLITON - Australian nickel explorer Sirius Resources will supply BHP's Nickel West division in Australia with much-needed nickel-in-concentrate under a three-year supply agreement. 

BP - John Browne, the former chief executive of the oil giant, will take charge of a $10billion oil and gas venture backed by Russian billionaire Mikhail Fridman to help it expand internationally through partnerships and acquisitions.