Headline shares closed modestly lower after a strong start in New York provided a boost in the afternoon, but with banking shares in retreat and Prudential (LON:PRU) weak after pulling the plug on its AIA bid. At the close of business, the FTSE100 was down 11.98 points at 5,151.32 with the FTSE250 up 38.85 points at 9,660.38 and the FTSE Smallcaps 1.47 points lower at 2,751.99. US stocks made steady progress in late morning trade, helped by encouraging pending home sales data for April. Approaching the close in London, the Dow Jones Industrial Average was up 92 points at 10,116, the S&P500 added 11 points at 1,082 and the Nasdaq Composite rose 24 points at 2,246.

LONDON MARKETS

The main index pulled off its lows in afternoon trade as a strong start on Wall Street encouraged some buying.
However, markets in London were again blighted by BP's continuing concerns in the Gulf of Mexico, as the US Government raises the ante by commencing criminal and civil investigations. BP (LON:BP.) shares closed down just 0.25p at 429.75p as the company became more confident that it is close to a resolution of the spillage problem.

Shell and BG Group (LON:BG.) struggled throughout the session as BP's problems cast a shadow over the entire industry, although Shell rallied to close up 3p at 1,744p as crude ticked back over $73 a barrel. BG Group (LON:BG.) was not so well blessed, falling 25.5p at 1,063p.

Meanwhile, miners found the going tough as metals prices continued to ease on demand concerns, with Anglo American (LON:AAL) the weakest link, off 56p at 2,591.5p. Rio Tinto (LON:RIO) dipped 14p at 3,138p and BHP Billiton (LON:BLT) dropped 18.5p at 1,856p. Randgold Resources (LON:RRS) gave back 65p at 6,130p as gold settled around $1,220 an ounce.

In the financial sphere, Prudential (LON:PRU) again made the headlines after officially pulling out of the proposed acquisition of AIG's Asian business, at a cost of £450m. The rights issue which was to support the bid is also shelved. Prudential (LON:PRU) shares gave back some of the previous session's strong gains as the euphoria waned, losing 14.5p at 561p.

Banking issues slipped as Eurozone weakness further dented sentiment, with Royal Bank Of…

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