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Decline in US output halts Footsie rally

THE recent rally on the London market was brought to a halt after figures revealed a shock contraction in the US economy at the end of last year.

America saw its first decline in gross domestic product (GDP) since 2009, with the economy shrinking by an unexpected 0.1% in the fourth quarter of 2012, although the figure is still subject to revision.

The FTSE-100 Index closed 16.08 points lower at 6323.11 yesterday, having surged above 6300 for the first time in more than four-and-a-half years on Tuesday.

Wall Street's Dow Jones industrial average also slipped into the red, but trading remained surprisingly resilient as investors took heart from the fact that consumer spending and business investment rose in the fourth quarter.

Materials technology firm Johnson Matthey was one of London's biggest fallers amid disappointment over its third-quarter results.

Credit Suisse said pre-tax profits of £84 million were below its forecast of £96m, while there was disappointment over the company's performance in autocatalysts, particularly heavy duty diesel catalysts in Europe.

The top-flight company fell 102p to 2306p.

Lambert & Butler maker Imperial Tobacco was also in the red, down 105p to 2361p, after warning over first-half profits as its sales suffer from the illicit cigarette trade.

And there was a further drop for temporary power supply firm Aggreko, which has lost its spark in recent weeks following a profits warning in December.

It had been one of the City's top-performing stocks prior to the warning, but it fell 89p to 1612p.

BT Group was among the risers in London as it recovered from a 2% fall seen on Wednesday after its own house broker trimmed its target price for the shares following a recent strong run.

The shares firmed 3.8p to 250p.

There was also a rise of 0.25p to 475.9p for oil giant BP ahead of results next week, while HSBC was 4p higher at 724.1p after it announced the creation of a new committee, including a former UK tax chief, as part of its crackdown on financial crime.

In other corporate news, United Utilities held firm at 740p after it said it continued to trade in line with expectations, fuelling hopes it will meet its outperformance targets for the five-year regulatory period.

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