FTSE heads for bear market

Thursday, 03 July 2008 12:00

Higher oil prices sent shares down this morning, leading analysts to forecast the return of a bear market.

Higher oil prices, hitting $144 a barrel, sent equities lower this morning and by 10:00 BST the blue-chip index had fallen to 5,416.30.

Marks & Spencer continued its slide this morning, falling 2.8 per cent to 233.25p after yesterday's trading statement showed a decline in sales.

The news has sparked a sell-off in high street shares, and DIY group Kingfisher also fell 2.8 per cent, while Carphone Warehouse dropped 3.5 per cent.

Mining stocks were up, with Eurasian Natural Resources climbing 5.5 per cent to £11.24 and Antofagasta up 4.3 per cent by 10:00 BST.

News from the Ministry of Defence that BAE Systems has signed a £3 billion deal to build two new aircraft carriers helped boost stocks in the defence company, which were up 1.9 per cent.

Today, investors will be watching for the interest rate announcement from the European Central Bank, as a quarter percentage point hike is widely expected.

Analysts will also be waiting for US employment data which will be available later today, with many anticipating a further increase in the number of job losses.

A bear market - a prolonged period in which investment prices fall, accompanied by widespread pessimism - is usually defined as a two month period in which prices fall by 20 per cent or more.

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