Date: Thursday 28 Jun 2012
- Losses pared but banks still weigh on market
- Barclays and banks sold off on Libor issues
- Ladbrokes drops after profit warning
London's blue-chip index finished at 5,493 on Thursday, well above its intraday low of 5,438 but still firmly in the red, as banking stocks provided a drag on the back of the scandal surrounding Barclays and manipulated interbank leading rates.
Meanwhile, the summit of the European Council started this afternoon and will last until tomorrow; European leaders will be looking to tackle the sovereign debt crisis as they work towards a plan for tighter integration.
"A number of solutions are set to be discussed but the general consensus is that nothing will be agreed.," said analyst Craig Erlam from Alpari.
All signs suggest that France, Italy and Spain have organised their game play to fight for growth, while their respective leaders - François Hollande, Mario Monti, and Mariano Rajoy - continue to push for the famous 'eurobonds'. However, on the opposite team, German Chancellor Angela Merkel continues to shout “nein” to the idea of jointly-issued European debt.
In domestic news, UK gross domestic product (GDP) decreased at a 0.3% pace in the first quarter of 2012, in line with the preliminary estimate, according to data published by the Office for National Statistics (ONS).
UK house prices fell by 0.6% month-on-month in June to £165,738, according to mortgage lender Nationwide, so that prices are now 1.5% below where they were a year ago and at their lowest level since August 2009.
Shares in Barclays were under heavy selling pressure after the banking group was found guilty of 'market manipulation' into interbank lending rates, prompting calls for the resignation of Chief Executive Officer Bob DIamond. Financial peers HSBC, Royal Bank of Scotland (RBS), Lloyds, and ICAP are also facing an inquiry into Libor manipulation, it has been reported.
Lloyds announced last night that it has agreed on the terms of the 632 branch-network sale, otherwise known as Project Verde, to the Co-op.
Potential merger partners Xstrata and Glencore were unwanted on the back of rumours that Glencore could walk away from the possible tie-up after Xstrata shareholder Qatar Holdings demanded a high exchange ratio earlier this week
Meanwhile, Polymetal was suffering from a downgrade by UBS from 'buy' to 'neutral' due to the "recent strong share price performance and weaker silver prices".
Consumer products group Reckitt Benckiser fell after Credit Suisse downgraded the stock to 'neutral' and cut its target price from 3,800p to 3,500p. Engineer IMI was lower after UBS cut its target price by 100p and reduced its earnings estimates for 2012 and 2013. "We expect negative organic growth in H1 with the decline accelerating into the second half," the broker said.
Steel giant Evraz was extending losses made yesterday when German peer Salzgitter gave a gloomy outlook for the industry. Goldman Sachs slashed its target price for Evraz this morning from 700p to just 400p, but kept a 'buy' rating.
Betting firm Ladbrokes dropped after it issued a profit warning for its Digital division, blaming increased technology investment, marketing spend and a poor sportsbook margin in the second quarter of 2012. Peel Hunt downgraded the stock from 'buy' to 'hold' this morning.
Hotels group Millennium & Copthorne was a high riser after Morgan Stanley upgraded the stock to 'overweight' and lifted its target price from 540p to 630p.
FTSE 100 - Risers
United Utilities Group (UU.) 674.50p +2.35%
Aggreko (AGK) 2,000.00p +1.99%
CRH (CRH) 1,148.00p +1.41%
Severn Trent (SVT) 1,645.00p +1.36%
AstraZeneca (AZN) 2,828.50p +1.05%
Eurasian Natural Resources Corp. (ENRC) 400.30p +0.98%
BT Group (BT.A) 207.40p +0.97%
National Grid (NG.) 673.50p +0.97%
BP (BP.) 412.40p +0.95%
Royal Dutch Shell 'B' (RDSB) 2,204.00p +0.87%
FTSE 100 - Fallers
Barclays (BARC) 165.60p -15.53%
Royal Bank of Scotland Group (RBS) 206.40p -11.45%
ICAP (IAP) 330.90p -4.23%
Lloyds Banking Group (LLOY) 29.94p -3.90%
Evraz (EVR) 241.00p -3.17%
Polymetal International (POLY) 880.00p -3.03%
HSBC Holdings (HSBA) 558.20p -2.58%
Burberry Group (BRBY) 1,298.00p -2.33%
IMI (IMI) 790.00p -2.29%
Reckitt Benckiser Group (RB.) 3,300.00p -2.28%
FTSE 250 - Risers
JD Sports Fashion (JD.) 700.00p +6.63%
Kenmare Resources (KMR) 39.92p +5.05%
Essar Energy (ESSR) 119.00p +4.11%
Rightmove (RMV) 1,580.00p +3.07%
Spirit Pub Company (SPRT) 50.75p +2.53%
Afren (AFR) 98.40p +2.39%
Melrose (MRO) 368.70p +2.30%
Cairn Energy (CNE) 256.00p +2.07%
Debenhams (DEB) 84.95p +2.04%
Dechra Pharmaceuticals (DPH) 478.80p +1.98%
FTSE 250 - Fallers
Ladbrokes (LAD) 152.70p -12.14%
Aquarius Platinum Ltd. (AQP) 44.50p -8.92%
Ocado Group (OCDO) 79.50p -6.47%
Bwin.party Digital Entertainment (BPTY) 109.50p -5.68%
Barratt Developments (BDEV) 130.20p -4.48%
International Personal Finance (IPF) 236.20p -3.91%
Chemring Group (CHG) 277.90p -3.87%
Intermediate Capital Group (ICP) 256.70p -3.35%
Shanks Group (SKS) 77.00p -3.27%
Tullett Prebon (TLPR) 280.40p -3.18%
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