Market Report: FTSE finishes its good year on a whimper

It was with a whimper rather than a bang that the FTSE 100 said goodbye to 2010 yesterday, but a poor final session failed to take the shine off an impressive 12 months for the top-tier index.

On a half-day of trading, risers were at a premium as the index shed 71.07 points to close on 5,899.94, with only 10 stocks in positive territory by the bell. Still, despite experiencing its third session down in a row, the blue-chip index rose 9 per cent overall in 2010, its second successive year of gains.

December was particularly strong, being a month in which the FTSE 100 added 6.7 per cent and closed above the 6,000 mark for the first time since mid-2008. It also left the index's performance over the last 10 years in better shape, with it now having lost 5.18 per cent since the start of 2001.

Given recent strong performances, it was perhaps unsurprising that investors took the chance to release some profits. City Index's Joshua Raymond pointed out that not too much should not be read into the decline, "with it being the final session of the year and with light volumes exacerbating falls".

For the retailers, it was the last trading opportunity for them before the planned VAT rise to 20 per cent comes into effect on Tuesday.

Next – which releases its fourth-quarter trading statement next Wednesday (a key update for those interested in how the sector has coped over the Christmas period) was 19p lower on 1,975p, and was closely followed by Primark-owner Associated British Foods, which edged down 1p to 1,181p.

The supermarket groups were early risers in initial trading, but they were mostly unable to hold on to their gains. Tesco ended the session 4.55p weaker on 425p, while J Sainsbury eased back 3.8p to 376.3p. However Morrisons – which is releasing its latest update early in the New Year – managed to put on 0.2p to 267.6p.

Among the mid-cap retailers, Debenhams dipped 0.95p to 70.8p but there was better news for Dixons. The electronics chain has had a torrid 2010, having lost around 40 per cent of its share price over the past 12 months including a drop of over 10 per cent in just two sessions in the run-up to Christmas. Yesterday, however, saw it post a slight gain of 0.1p to close on 22.92p.

One of the main drivers of the markets recently have been strong metal prices, and the miners have reaped the benefits. Yesterday was a different story, thanks in part to worries that China may follow up its Christmas Day interest-rate hike with further increases, and BHP Billiton and Rio Tinto dropped 63p to 2,551p and 97.5p to 4,486.5p respectively.

Usually, when the miners are down it is a sign that investors have rushed for the relatively safer ground of the defensive stocks, yet traders expressed their surprise that these were among the fallers as well.

In fact, Scottish & Southern Energy was the second biggest loser of the day, stuck to the foot of the top-tier index after sliding 33p to 1,225p. Not far away was National Grid, which shed 11.5p to finish on 553p, while GlaxoSmithKline was knocked back 19p to 1,240p.

One of the few risers was Weir Group which gained 4p to 1,780p in what has been a great year for the company. The maker of pump and valves was the best performer on the FTSE 100 in 2010, rising nearly 150 per cent.

Investors seemed noncommittal on BSkyB, which did not move from 736p, on the day that Ofcom was due to submit its report on News Corporation's proposed takeover of the broadcaster. The media regulatory body is presenting its findings to the Culture Secretary, Jeremy Hunt, instead of Business Secretary Vince Cable, following Mr Cable's highly-publicised remarks on the deal.

Among the mid-tier companies, there was some good news for the housebuilders as the latest Nationwide figures showed house prices had gone up by 0.4 per cent in December. This is the first time a gain has been seen since May, and meant that over 2010 prices had increased by 0.4 per cent as well.

However, IHS Global Insight's chief UK and European economist Howard Archer cautioned that "housing market activity is still very low compared to long-term norms, and the economic fundamentals for house prices are largely unfavourable". As a result, he predicted that rather than seeing another improvement next year, "house prices are likely to fall by around 6 per cent in 2011".

The reaction to the data was mixed; Bellway rallied 14.5p to 670p and Taylor Wimpey closed on 31.51p, 0.23p stronger. However, Berkeley Group and Barratt Developments were knocked back 10.5p to 890p and 1.3p to 88.65p respectively.

On the Alternative Investment Market, the tiddler BgenuineTec – which develops fingerprint authentication technologies – lost more than 30 per cent of its value, plummeting 2.5p to 5p. The company is currently being prevented from launching a share issue thanks to legal action brought by a number of its shareholders, and it yesterday revealed that the problems are still ongoing.

FTSE 100 Risers

ICAP 535p (up 6.5p, 1.23 per cent)

Money broker finishes top of the last blue-chip index leaderboard of the year 2010.

IMI 945p (up 5p, 0.53 per cent)

Engineering company moves forward at end of the year in which it was promoted to the top-tier index.

Fresnillo 1,668p (up 7p, 0.42 per cent)

Silver and gold miner enjoys fourth consecutive session of its share price moving up.

FTSE 100 Fallers

Rolls-Royce 623p (down 12.5p, 1.97 per cent)

Down following Airbus's move on Thursday to amend its delivery forecast for its A380 planes.

Anglo American 3,335.5p (down 50.5p, 1.49 per cent)

Drops in the wake of declaring force majeure on its Australian mines earlier in the week.

Resolution 234.1p (down 3.1p, 1.31 per cent)

The insurance buy-out vehicle is the blue-chip index's worst performer of 2010.

FTSE 250 Risers

Colt 137.7p (up 8.4p, 6.5 per cent)

Telecoms group regains ground after Thursday's losses, to close on top ofthe mid-tier index.

Ocado 178.3p (up 7.1p, 4.15 per cent)

Finishes the year of its market debut in recovery mode, after initial plummet on flotation.

National Express 251p (up 2.9p, 1.17 per cent)

Up despite today's fuel duty increase, which sees a litre of diesel and petrol rise by 0.76p.

FTSE 250 Fallers

Hays 128.9p (down 2.9p, 2.2 per cent)

Recruitment company sees share price fall ahead of next Thursday's trading update.

Segro 286.4p (down 5.9p, 2.02 per cent)

Fitch Ratings confirms final rating as "A-" for two of industrial property group's bonds.

Domino's 551.5p (down 8.5p, 1.52 per cent)

Down as company prepares to reveal interim management statement on Wednesday.