FTSE Close: Unilever up; Smiths Group down

 

17.10 (close)

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A flurry of deal activity in the consumer sector failed to stir the London market today as investors appeared content to consolidate recent gains.

The FTSE 100 Index has risen by 6% in September and with the top flight at its best level since late April there was little appetite for further buying, leaving the benchmark index 25.1 points lower at 5573.4.

The mood was similar on Wall Street, where US stocks have been enjoying their best month since March 2000 but failed to sparkle by the time of London's close.

Fresh concerns about the European banking system hampered trading after Moody's Investor Service downgraded the debt of Anglo Irish Bank.

The lacklustre performance came despite a renewed bout of corporate activity following major deals involving Dove and Flora owner Unilever and Asda supermarket business Wal-Mart.

Unilever's £2.3bn deal to buy American haircare firm Alberto Culver gave a boost to the share price of the Anglo-Dutch firm, which closed 23p higher at 1816p after its swoop for brands such as VO5, TRESemme and Simple.

In the United States, shares in Southwest Airlines jumped after announcing it will buy AirTrain Holdings, while Wal-Mart Stores was in the spotlight after a proposal to buy South African Massmart Holdings.

The acquisition for about 4.25bn US dollars (£2.7bn) is being seen as a move to jump-start growth beyond its sluggish US business.

The session was also notable for gold prices remaining at near $1,300 an ounce, while an upbeat report on the UK economy from the International Monetary Fund helped the pound against the dollar and euro.

In today's corporate results, shares in building supplies firm Wolseley were 10p lower at 1520p after it announced a modest 1% rise in annual trading profits and highlighted an uncertain outlook for core markets in the US and UK.

It was joined on the fallers board by Smiths Group, which dropped 20p to 1207p after BofA-Merrill Lynch lowered its recommendation ahead of this week's full-year results by the world's biggest maker of airport scanners.

Other broker notes had a positive impact, with software firm Sage rising 3% or 8.1p to 266.3p following a review of the IT sector by Barclays Capital, while Premier Inn firm Whitbread was up 6p to 1628p due to an upgrade by Credit Suisse.

Elsewhere, HSBC slipped 5.4p to 660.9p following Friday night's confirmation that chief executive Michael Geoghegan will leave the banking giant.

After a week of speculation over boardroom bust-ups and rumours surrounding Mr Geoghegan's exit from the firm, HSBC confirmed finance boss Douglas Flint as chairman and Stuart Gulliver as the new chief executive.

Outside the top flight, the Unilever deal was mirrored in the FTSE 250 Index by Imperial Leather owner PZ Cussons with its acquisition of tanning firm St Tropez. The £62 million purchase failed to inspire the share price, which slipped 0.8p to 364p.

The biggest FTSE 100 risers were Sage up 8.1p at 266.3p, Weir ahead 25p at 1405p, Autonomy up 29p at 1800p and Kazakhmys ahead 21p at 1442p.

The biggest fallers were African Barrick Gold down 18p at 578.5p, G4S off 7.3p at 252.9p, Inmarsat down 14.5p at 688.5p and Randgold Resources off 115p at 6370p.

15.45 Markets on both sides of the Atlantic were slightly lower today as fresh concerns about the European banking system cooled the September rally.

Wall Street's Dow Jones slipped 18.9 points to 10,841.4 in early trading after Moody's Investor Service downgraded the debt of Anglo Irish Bank, renewing concerns about the health of the European banking system.

The Standard & Poor's 500 Index fell 1.67 points, or 0.15%, to 1,147.

'We are nearing the end of the quarter, we've had a very strong month,' said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. 'We may be in for a bit of consolidation here.'

The S&P 500 is heading for its best month since March 2000 and its best September - usually one of the weakest months for stocks - since 1939.

The next resistance on the S&P 500 is at around 1,173, the highest level since May 6, when it lost nearly 100 points intraday during the 'flash crash.'

Shares of AirTran holdings Inc rose 59% to $7.24 after Southwest Airlines offered to buy the regional carrier for $7.69 per share. Southwest was up 7% to $13.2. Preorders in China for Apple Inc's iPhone 4 have exceeded 200,000 units since the smartphone went on sale Saturday, distributor China Unicom said. Apple added 0.4% to $293.47.

In London the market slipped 21 points to 5,576 after an initial boost from Unilever's deal to buy American firm Alberto Culver.

12.30

The Footsie slipped into negative territory, down 0.4 points to 5,598.1, despite a rally for consumer goods giant Unilever.

Among miners, Antofagasta was ahead 14p at 1,195p and Vedanta Resources advanced 23p to 2,304p.

Leisure services group Whitbread also received a boost from an upgrade by Credit Suisse. Shares were up 15p to 1,637p.

11.30

The Footsie has slipped back 7 points to 5,591.4 after making slight morning gains.

Unilever stocks are up 42p to 1,835p on the news of its £2.3bn deal for American rival Alberto Culver.

Building supplies firm Wolseley is moving its tax base to Switzerland to save it £23m a year, but despite announcing higher trading profits it has slipped 35p down to 1,495p.

PZ Cussons has bought St Tropez for £62m, with its stock gaining 5.2p to 370p on that deal.

09.30

The London market was given a boost today after consumer goods giant Unilever struck a £2.3bn deal to buy American haircare firm Alberto Culver.

The proposed acquisition of brands such as VO5, TRESemme and Simple was well received in the City as Unilever shares rose 42p to 1,835p.

The latest round of deal-making nudged the wider market as the Footsie followed on a solid session in Asia to edge up 4.8 points to 5,603.3.

House prices rose at their slowest annual rate in seven months in September, as prices fell monthly in all regions for the first time in almost 18 months, according to a survey by Hometrack.

But growth in Britain's financial sector fell short of expectations over the last three months, and most financial firms expect to mark time during the remainder of the year, according to a survey by the Confederation of British Industry.

UK shares had staged a late rally on Friday, sparked by better-than-expected US macroeconomic data, and the UK benchmark is up 7.5% this month and on track for its biggest monthly rise since July 2009. In terms of valuations, the UK index looked cheaper than the US S&P 500 though in line with Germany's DAX.

'We are coming into some pretty overbought levels,' said Jawaid Afsar, trader at Securequity. 'You can't expect the market to continue to rise quite feverishly.

'Notwithstanding the fact that we could face a short-term correction given the overbought nature of the market, there is still upside for at least 100 and 150 points left.'

Financial stocks were among the beneficiaries of the improved sentiment as Prudential lifted 11.5p to 627p, Aviva gained 4.2p to 405.1p and Lloyds Banking Group cheered 1p to 77.65p.

However, there was no such gain for HSBC as investors digested developments on Friday evening when the bank confirmed the departure of chief executive Michael Geoghegan at the end of the year and said it would install finance boss Douglas Flint as chairman.

The deal involving Unilever was mirrored in the FTSE 250 Index by Imperial Leather owner PZ Cussons' acquisition of tanning firm St Tropez. The £62m purchase helped the PZ Cussons share price to rise 4.7p to 369.5p.

In corporate results, shares in building supplies firm Wolseley were flat at 1,528p after it announced a 1% rise in annual trading profits and said it would move its tax base from the UK to Switzerland in a move set to save the company around £23m a year.

AstraZeneca slipped on a drug trial setback, losing 25p to 3,309p after the company's experimental prostate cancer pill zibotentan failed to improve survival in a late-stage clincial trial, dealing a fresh blow to the its oncology pipeline.

Mining shares were in demand, aided by a Goldman Sachs price target hike of a number of miners including Kazakhmys, which rose 16p to 1,437p, and Lonmin, which added 9p to 1,727p. BHP Billiton put on 6p to 2,015.5p.

Smiths Group led FTSE 100 fallers, down 27p to 1,200p after BofA Merrill Lynch downgraded the technology firm to 'neutral' from 'buy'.

Wolseley lost 14p to 1,516p as the world's largest plumbing, heating products and building materrials supplier said it plans to redomicile to Switzerland for tax reasons as it posted flat year profit.

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