FTSE ends worst week since early Feb; comods weigh

Reuters: [2008-05-23 18:00:00]

By Dominic Lau

LONDON, May 23 (Reuters) - Britain's leading stock index slid 1.5 percent on Friday to end its worst week since early February as miners and oil shares weighed, though Cable & Wireless <CW.L> rose on upbeat broker views.

The FTSE 100 <.FTSE> closed down 94.3 points at 6,087.3, for a weekly loss of 3.4 percent.

The benchmark index is flat for the month, but is down 5.7 percent for the year. The UK stock market will close on Monday for a holiday.

"The market starts to ask itself how far can any recovery go given the background that we have got," said Keith Bowman, equity analyst at Hargreaves Lansdown.

"Minutes from the Fed earlier this week do look to confirm that we have seen the last of the interest rate cuts in the States, and probably in the UK for some months ... This week has also been the story of rising oil prices. Apart from the energy sector, it is pretty much bad news across the board," he said.

Miners shaved 43 points off the index as copper prices eased, with Kazakhmys <KAZ.L> the top loser, down 5.6 percent.

BHP Billiton <BLT.L> shed 4.7 percent and Rio Tinto <RIO.L> fell 5.6 percent after the Wall Street Journal said BHP's proposed acquisition of Rio faces increasing scrutiny from European regulators worried about the impact on steel prices. [ID:nL23662337]

BHP was not immediately available for comment.

Antofagasta <ANTO.L>, Xstrata <XTA.L>, Anglo American <AAL.L> and Lonmin <LMI.L> were off between 3.3 and 5.3 percent.

CRUDE PRICES

Oil shares also languished even as crude prices <CLc1> traded up above $133 a barrel, but well short of its all-time high of $135 on Thursday.

Index heavyweight BP <BP.L> dropped 2.6 percent, Royal Dutch Shell <RDSa.L> lost 1.5 percent, gas producer BG Group <BG.L> slipped 2.8 percent and Tullow Oil <TLW.L> shed 3.6 percent.

Banks were also generally weaker, with Barclays <BARC.L> down 1.5 percent, HSBC <HSBA.L> off 0.5 percent, Standard Chartered <STAN.L> slipping 1.4 percent and HBOS <HBOS.L> losing 2.6 percent.

The economic outlook remained gloomy. Bank of England policymaker Andrew Sentance said Britain's economy looked set for a "significant slowdown" and might even tip into recession. [ID:nL2388366]

Lloyds TSB <LLOY.L>, however, was up 1 percent after Exane BNP upgraded its rating on the lender to "neutral" from "underperform".

Cable & Wireless <CW.L> rose 4.1 percent to top the FTSE 100 gainers, extending the previous session's 2.7 percent gains on its demerger announcement, after UBS and Lehman Brothers both raised their price targets on the stock.

Insurer Friends Provident <FP.L> was 0.8 percent higher. A source familiar with the matter said a number of private equity companies are among the bidders for Lombard, the high-end insurance arm of Friends.

AstraZeneca <AZN.L> fell 2 percent after Nomura cut its rating on the drugmaker to "reduce" from "neutral". (Editing by Sue Thomas) ((dominic.lau@reuters.com; +44 20 7542 5440; Reuters Messaging: dominic.lau.reuters.com@reuters.net))

     
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Commodity shares knock FTSE but banks forge on

Reuters: [2008-05-23 13:24:00]

By Rebekah Curtis

LONDON, May 23 (Reuters) - Britain's FTSE 100 <.FTSE> had dipped 0.5 percent by mid-session on Friday as commodity shares fell, but banks shook off their previous session's losses as an investment rating upgrade bolstered Lloyds TSB <LLOY.L>.

Miners knocked 28 points from the UK benchmark index as copper prices <MCU3=LX> slipped more than 1 percent, with Eurasian Natural Resources <ENRC.L> the top loser with a 4.5 percent slide.

BHP Billiton <BLT.L> was down 3.4 percent, and Rio Tinto <RIO.L> shed 4.1 percent after the Wall Street Journal said BHP's proposed acquisition of Rio faces increasing scrutiny from European regulators worried about the impact on steel prices [ID:nL2389154]. BHP was not immediately available for comment.

By 1038 GMT the FTSE 100 was down 28.8 points at 6,152.8 ahead of a three-day bank holiday weekend for the UK markets. Shares fell across Europe, while U.S. stock index futures pointed to a weaker start on Wall Street.

"It's quite clear that we're walking towards the long weekend now, and there's not a huge amount of action going on," said Peter Dixon, an economist at Commerzbank.

Inflation concerns hovered over the market as U.S. crude oil prices <CLc1> rose above $132 a barrel, but short of the record $135 mark hit on Thursday.

Royal Dutch Shell <RDSa.L> and its rival BP <BP.L> both dropped about 1 percent. BG Group <BG.L> lost 1.3 percent.

The macroeconomic agenda includes U.S. home sales due at 1400 GMT.

BANKS RISE

Banks rose broadly, with Lloyds adding 3.5 percent after Exane BNP upgraded the stock to "neutral" versus "underperform".

Royal Bank of Scotland <RBS.L> rose 2.3 percent, and Barclays <BARC.L> put on 1.3 percent.

"It's an unwinding of the negative sentiment which built up over the first three or four months of the year," Commerzbank's Dixon said.

"The banks have taken a bit of a pasting in recent months, (but) the end of the world clearly isn't yet upon us."

He added, however, that banks exposed to the UK market would "continue to fight some quite nasty headwinds".

Cable & Wireless was another standout gainer, adding more than 3 percent after UBS and Lehman Brothers both raised their price targets on the stock. [nWNA2477] [nWNA2454]

Sainsbury <SBRY.L> added more than 2 percent after ABN AMRO raised its rating on the stock to "buy" from "hold". Its rival Morrison <MRW.L> added 1.4 percent.

But Home Retail Group <HOME.L> lost 1 percent after Credit Suisse cut its price target on the stock to 265 pence from 305 pence, keeping a neutral rating.

British oilfield services firm Expro International <EXR.L>, which agreed to a takeover in April, edged up after saying it had received a higher approach worth 1.7 billion pounds ($3.4 billion) from U.S. rival Halliburton <HAL.N>. [ID:nL2316220] (Editing by Will Waterman) ((rebekah.curtis@reuters.com; +44 20 7542 4365; Reuters Messaging: rebekah.curtis.reuters.com@reuters.net))

FTSE falls on commodities; Cable & Wireless jumps

Reuters: [2008-05-23 10:16:00]

By Rebekah Curtis

LONDON, May 23 (Reuters) - Britain's FTSE 100 <.FTSE> index shed 0.5 percent early on Friday as commodity shares slipped into the red, but Cable & Wireless <CW.L> bucked the trend after brokerages raised its price target.

Miners all traded lower, knocking nearly 19 points from the index as copper prices <MCU3=LX> drifted lower. Vedanta Resources <VED.L> dropped 2.6 percent, BHP Billiton <BLT.L> was down 2.5 percent, and Rio Tinto <RIO.L> slipped 2.2 percent.

BHP's proposed acquisition of Rio Tinto is facing increasing scrutiny from European regulators worried about the impact on steel prices, the Wall Street Journal said. [ID:nL2389154]

U.S. crude oil prices <CLc1> above $131 a barrel kept inflationary concerns alight, but were shy of the record $135 hit overnight.

Royal Dutch Shell <RDSa.L> shed 0.8 percent, its rival BP <BP.L> dropped 0.5 percent, while BG Group <BG.L> lost 1.3 percent.

By 0751 GMT the FTSE 100 was down 33 points at 6,148.6.

"We've got a background that is very unwelcome for equity markets, this uneasy combination of slower, stagnating growth with rising inflation, primarily induced by rising commodity prices," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"Given the combination of a stagflationary environment, very poor economic news flow, very little volume, the market's going to drift a little lower."

U.S. stocks rose modestly on Thursday after two days of steep declines as energy prices pulled back from record highs and a proposed acquisition in the utilities sector buoyed optimism.

On the macroeconomic agenda, investors will eye U.S. home sales due at 1400 GMT.

CABLE & WIRELESS JUMPS

Cable & Wireless topped the FTSE 100 gainers' list, adding 1.7 percent after UBS and Lehman Brothers both raised their price targets on the stock. [nWNA2477] [nWNA2454]

Sainsbury <SBRY.L> added 1.1 percent after ABN AMRO raised its rating on the stock to "buy" from "hold". Its rival Morrison <MRW.L> added 0.8 percent.

But Home Retail <HOME.L> lost 1.3 percent after Credit Suisse cut its price target on the stock to 265 pence from 305 pence, keeping a neutral rating.

Among midcaps, British oilfield services firm Expro International <EXR.L>, which agreed to a takeover in April, ticked up after saying it had received a higher approach worth 1.7 billion pounds ($3.37 billion) from U.S. rival Halliburton <HAL.N>. [ID:nL2316220] (Reporting by Rebekah Curtis, editing by Will Waterman) ((rebekah.curtis@reuters.com; +44 20 7542 4365; Reuters Messaging: rebekah.curtis.reuters.com@reuters.net))

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  Keywords: MARKETS BRITAIN STOCKS =2 
    

Oils drive FTSE to 3-week closing low; Vodafone gains

Reuters: [2008-05-22 18:02:00]

By Dominic Lau

LONDON, May 22 (Reuters) - Britain's blue-chip share index edged down on Thursday in a volatile session as oil shares slipped back, outweighing gains in miners and Vodafone <VOD.L>.

The FTSE 100 <.FTSE> closed down 16.5 points, or 0.3 percent at 6,181.6, its lowest closing level in three weeks. The index fluctuated between a high of 6,226.2 and a low of 6,159.4 during the session.

In continental Europe, Germany's DAX <.GDAXI> finished the day higher, while France's CAC-40 <.FCHI> ended flat.

"The FTSE 100 is very indecisive and taking its lead from Wall Street which is also looking rather jittery as of late," said Tim Whitehead, head of portfolio services at Redmayne-Bentley.

"Short-term we are moving sideways ... I wouldn't be surprised to see the index trading in the range of between 6,100 and 6,300."

Index heayweight Vodafone advanced 3.1 percent as investors bet on robust results next Tuesday and after British telecoms company Cable & Wireless <CW.L> said it was considering a demerger of its two divisions this financial year, traders said.

C&W was up 2.7 percent, also aided by its forecast-beating results. [ID:nL22716852]

British Airways <BAY.L> climbed 4.7 percent to top the FTSE 100 gainers after the British Air Line Pilots' Association said it had withdrawn its court action against BA, signalling that a potentially costly pilot strike has been averted.

Oil shares were the biggest drag on the index, as U.S. crude prices <CLc1> lost $1 to just above $132 a barrel after a surge to a new record above $135.

Royal Dutch Shell <RDSa.L> shed 2.1 percent, BP <BP.L> eased 0.5 percent, gas producer BG Group <BG.L> fell 3.4 percent and Cairn Energy <CNE.L> lost 3.9 percent.

Miners were generally firmer, with BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Anglo American <AAL.L>, Xstrata <XTA.L> up between 0.4 and 2.1 percent.

Cadbury <CBRY.L> added 2.4 percent on renewed market speculation of a takeover bid for the British confectioner, traders said. Traders said U.S. investors Warren Buffett, Hershey <HSY.N> and Kraft Foods Inc <KFT.N> were being mentioned as potential suitors.

Leading the downside, London Stock Exchange <LSE.L> shed 4.6 percent despite meeting forecasts with a 52 percent rise in its annual operating profit as traders cited a weak outlook for the firm and heightening competition pressures. [ID:nL16887159]

Banks remained under pressure, with Swiss bank UBS <UBSN.VX> launching a deeply discounted rights issue worth 16 billion Swiss francs ($155.55 billion) at a third below its latest market price in a bid to lure investors to repair its battered balance sheet.

Barclays <BARC.L>, HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and HSBC <HSBA.L> were down 0.9 to 1.5 percent.

Imperial Tobacco <IMT.L> lost 4.2 percent after UBS issued a downbeat note on the stock.

Tate & Lyle <TATE.L> slipped 2.3 percent as analysts turned cautious on the outlook for the sugar refiner and sweetener maker, especially its North American ingredients business which is suffering from soaring corn prices. (Additional reporting by Michael Taylor and Rebekah Curtis; Editing by Greg Mahlich)

((dominic.lau@reuters.com; +44 20 7542 5440; Reuters Messaging: dominic.lau.reuters.com@reuters.net))

FTSE dips as economic woes drag on banks; miners up

Reuters: [2008-05-22 13:42:00]

By Michael Taylor

LONDON, May 22 (Reuters) - Britain's blue-chip share index slipped back on Thursday during a volatile session as economic worries saw bank stocks drag, while firmer metal prices buoyed mining shares.

At 1120 GMT the FTSE 100 was down 7.1 points, or 0.1 percent at 6,191.0. after hitting a high of 6,226.2.

Across the Atlantic, U.S. stocks overnight posted their biggest losses in two weeks amid concern the economy there faces 1980s-style stagflation after the Federal Reserve slashed its economic growth forecasts while raising estimates for inflation.

On the UK upside, positive broker comment and firmer metal prices boosted mining shares, with Anglo American <AAL.L>, Xstrata <XTA.L> and Rio Tinto <RIO.L> up by between 1 and 1.8 percent.

Oil stocks were mixed as U.S. crude prices hit record-breaking levels at $133 a barrel. Heavyweight BP <BP.L> tacked on 0.5 percent, while rival Shell <RDSa.L> lost 1 percent.

Beaten-down banks headed further south after Swiss bank UBS <UBSN.VX> launched a deeply discounted rights issue worth 16 billion Swiss francs ($15.55 billion).

Barclays <BARC.L>, Lloyds TSB <LLOY.L> and HSBC <HSBA.L> fell 0.8-1 percent.

Analysts at Keefe, Bruyette & Woods also said earnings in the UK banking sector would suffer if banks were hit by credit losses of the same magnitude as the early 1990s, with earnings across the sector dropping some 75 percent and capital ratios becoming "increasingly uncomfortable".

"The market has been quite volatile," said Jawaid Afsar, a trader at Securequity in Sheffield. "You can see on the books today that volumes are pretty thin and as soon as there is a wave of selling traders are just pulling their bids."

"Short-term I can see (oil) coming to a level where profit-taking is going to be coming in and it's going to be quite swift. Traders have been caught short building their positions and that's caused a spike -- there is no other fundamental reason."

"The economic picture is getting gloomier," Afsar added. "Things are a lot worse than they were a week ago."

Topping the FTSE 100 leaderboard however, Cadbury <CBRY.L> rose more than 4 percent on renewed market speculation of a takeover bid for the British confectioner, traders said.

Cadbury had no immediate comment.

Traders said U.S. investor Warren Buffett, Hershey <HSY.N> and Kraft Foods Inc <KFT.N> were being mentioned as potential suitors.

On the macroeconomic front, British retail sales showed unexpected resilience in April, falling less than expected thanks to a rush to buy computer games, official data showed on Thursday. [ID:nL22586765]

C&W EARNINGS RISE

British telecoms company Cable & Wireless <CW.L> rose 2.7 percent after it said it is considering a demerger of its two divisions this financial year after beating forecasts with a 23 percent rise in annual underlying core earnings.

Vodafone <VOD.L> gained 2.4 percent as traders said the stock was oversold in recent sessions.

Leading the downside, London Stock Exchange <LSE.L> shed 4.8 percent despite meeting forecasts with a 56 percent rise in adjusted operating profit.

Traders voiced concerns it was lagging behind competitors, adding the outlook was poor while the overall numbers themselves were good but not great. [ID:nL16887159]

Imperial Tobacco <IMT.L> was down 3.6 percent as traders cited negative broker comment.

Tate & Lyle <TATE.L> shares slipped 2.7 percent to 472 pence as analysts turned cautious on the outlook for the sugar refiner and sweetener maker, especially its North American ingredients business which is suffering from soaring corn prices.

Tate's annual pre-tax profits fell 11 percent due to losses at its sugar trading arm and a weak dollar, but analysts are concerned some of its businesses are hitting cyclical highs. (Additional reporting by Dominic Lau and Rebekah Curtis; Editing by Greg Mahlich) ((michael.taylor@reuters.com; +44 207 542 0919; Reuters messaging: michael.taylor.reuters.com@reuters.net))

Keywords: MARKETS BRITAIN STOCKS

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