London shares closed flat on Wednesday amid renewed concern about the looming “fiscal cliff” of automatic tax rises and spending cuts which threatens to send the United States back into recession, dealers said.
The benchmark FTSE 100 index of leading companies edged up 3.57 points or 0.06 percent to 5,803.28 points.
Like other markets, London ran out of steam after recent gains as fiscal cliff worries overshadowed the Greek debt deal and encouraging US economic data, dealers said.
Investors kep to the sidelines after the Senate Majority Leader Harry Reid said “little progress” had been made in cross-party talks on the looming tax hikes and spending cuts due to come in on January 1.
Reid’s comments raised the spectre of another long battle between Republicans and Democrats, similar to last year’s row over raising the country’s borrowing cap, which led to the United States losing its top-level AAA credit rating.
“There has been a lot of uncertainty surrounding the fiscal cliff in recent months, but throughout this time there has always been the feeling that it would be resolved, most probably right at the end of December,” said analyst Craig Erlam at trading group Alpari.
“However, a lack of progress so far in negotiations, according to Senate Majority Leader Harry Reid, has raised doubts over whether an agreement will be reached by 1 January.”
Shares in BP sank 0.43 percent to 429.40 pence after the British oil giant was banned from US government contracts over criminal charges stemming from the deadly 2010 Gulf of Mexico oil disaster.
Two weeks after the company agreed to pay $4.5 billion to settle Justice Department charges, the US Environmental Protection Agency ordered BP temporarily blocked from contracts until it can prove it meets US government business standards.
“EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company’s conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response,” the agency said.
Adverse legal rulings against GlaxoSmithKline and AstraZeneca failed to dampen shares in the two giant pharmaceutical companies.
GSK gained 2.5 pence or 0.19 percent to 1,337 pence although a French appeals court Wednesday upheld a ruling ordering the company to pay 197,000 euros to a man who claimed that its drug to treat Parkinson’s turned him into a gay sex and gambling addict.
The court in the northern city of Rennes said father-of-two Didier Jambart had suffered the side effects after being administered the drug Requip in 2003 for the illness, which causes tremors, slows movement and disrupts speech.
AstraZeneca rose 32.50 pence or 1.13 percent to 2,914 pence despite a reverse in an appeal in India. The Intellectual Property Appellate Board rejected the company’s appeal against a decision to deny patent protection to a cancer-fighting drug, in a new setback for global drug firms in the Indian market.
The case stems from 2007 when the Indian patent office refused to grant protection to AstraZeneca’s Gefitinib, which is used to treat lung cancer, because the drug had “known prior use” and could not be considered an invention.
Thomas Cook jumped 4.17 percent to 25 pence as an upbeat outlook at the travel firm offset news of deepening annual losses that were caused by the eurozone crisis, Middle East unrest and high fuel costs.
Other blue chip gainers in London included fashion group Burberry, up 2.74 percent at 1,274 pence, United Utilities, up 2.62 percent at 685.50 pence and retailer Marks & Spence, up 2.19 percent at 387 pence.
Among shares in the dog house were distributor Bunzl, down 4.00 percent at 1,031 pence, gold producer Polymetal, down 3.43 percent at 1,042 pence, and miner Evraz, down 3.38 percent at 231.40 pence.
On the currency markets, sterling sank to $1.6003 at 5:31 pm from $1.6026 on Tuesday night and eased to 1.2375 euros from to 1.2387 euros the previous night.
London shares close flat amid 'fiscal cliff' fears
