Friday May 9, 05:34 PM
London shares close weaker; financials down; Wall Street lower UPDATE
(updating with full report)
LONDON (Thomson Financial) - Leading shares closed lower, with a fall on Wall Street hurting UK companies across the board, including financials.
At the close, the FTSE 100 index was down 66.1
points at 6,204.7, up from the session low of 6,167.6. On the week, the FTSE 100 was down 10.8 points, or 0.2 percent. The FTSE 250 index fell 112.5 points today to close at 10,437.3.
In the United States, the Dow Jones Industrial Average was off 95.3 points at 12,771.5 as the London market was closing. The S&P 500 was down 8.4 at 1,389.28, while the Nasdaq Composite (NASDAQ: news) was off 4.3 at 2,446.94.
Insurance giant American International Group Inc. was a faller after reporting losses and the need to raise $12.5 billion. Reports that Citigroup (NYSE: C - news) is considering selling $400 billion in non-core assets to restore profit growth further unsettled investors, and, amid general market gloom, the financial sector was particularly badly affected.
UK financial plays also suffered.
Oil prices touched a new high of $126 per barrel, keeping Wall Street's inflationary concerns alive.
Jimmy Yates, a dealer at CMC Markets, said: 'After yesterday's bumper gains, a degree of profit-taking seemed as good as inevitable as we move towards the weekend break. Those massive losses from AIG last night have certainly dampened the overall mood for global equities and in many respects it's surprising that the FTSE hasn't fared any worse through the day.
He added: 'The fact oil is creeping higher once again too is adding to the general feeling of woe. For the time being the London index seems to have returned to more realistic levels.'
Aviva (LSE: AV.L - news) fell 8 pence to 639, Friends Provident (LSE: FP.L - news) was off 1.2 at 117.8, and Prudential fell back 7 to close at 702-1/2. Old Mutual (LSE: OML.L - news) , which reported a disappointing first-quarter on Thursday, fell 4.2 to close at 120.6. The shares lost 10.2 percent over the week.
Banking stocks were also in the doldrums, with HSBC closing 15-1/2 pence lower at 866 as Morgan Stanley (SPU - news) downgraded the group to 'underweight' from 'equal-weight'. HSBC makes a first-quarter update on Monday.
Other banking plays also extended Thursday losses, with Barclays (LSE: BARC.L - news) down 11-1/2 pence at 451-1/2, Royal Bank of Scotland (LSE: 91ID.L - news) off 10-1/4 at 347, HBOS (LSE: HBOS.L - news) 8-1/2 weaker at 505 and Lloyds TSB 10-3/4 pence lower to close at 433.
The heavyweight mining sector was also dragging the index lower, though the picture for metals was mixed, with gold and platinum higher, while copper was lower.
Vedanta Resources (LSE: VED.L - news) was 97 lower at 2,400; Xstrata (LSE: XTA.L - news) was off 121 at 4,186; Antofagasta (LSE: ANTO.L - news) was down 32-1/2 at 777.
Kazakhmys (LSE: KAZ.L - news) was the biggest mining casualty, off 128 at 1,876, after it rejected an indicative proposal from fellow Kazakhstan miner Eurasian Natural Resources Corporation (LSE: ENRC.L - news) . ENRC shares rose 19 to close at 1,307. The proposal valued Kazakhmys at 1,550 a share, less than the current share price.
Carphone Warehouse (LSE: CPW.L - news) closed 21 lower at 268, the biggest FTSE 10 faller, after announcing on Thursday that Best Buy is to acquire 50 percent of the group's Distribution business for 1.1 billion pounds.
Citigroup stuck to its 'sell' advice. Others agreed the deal has not impressed and pointed to ongoing concerns about what the group might do next.
Among other broker changes, Sage Group (LSE: SGE.L - news) gave back some of the previous session's gains, down 12-3/4 pence at 213-3/4 as Investec Securities cut its stance to 'hold' from 'buy' on valuation grounds following Thursday's first-half numbers.
WPP Group was hit by an ABN Amro (Amsterdam: ABAGB.AS - news) downgrade to 'hold' from 'buy' as part of a media sector review in which the broker said the agency sub-sector is facing pressure from all directions and it sees advertising budgets stagnating and agency margins stalling.
WPP (LSE: WPP.L - news) slipped 8-1/2 pence to 630.
And Johnson Matthey was down 41 pence at 1,916 as Morgan Stanley cut its rating on the group to 'underweight' from 'equal-weight', citing downside risks including a slowdown in global automotive production, lack of pipeline in Fine Chemicals & Catalysts and volatile platinum prices.
With oil prices at yet another record, $126 a barrel, British Airways (LSE: BAY.L - news) felt more pain, and closed 10-1/4 lower at 228-1/4. The company reports full-year results on Friday. Midcap easyJet fell 15 to 285, a 12-month closing low.
Only eight shares in the FTSE 100 rose more than 1 percent. Among them was consumer goods giant Unilever (LSE: ULVR.L - news) , 23 higher at 1,775, building on a 90 pence gain from Thursday, when its first-quarter update came in ahead of expectations.
Turning to the mid-caps, AGA Foodservice Group (LSE: 386132.L - news) was a casualty, down 14-1/2 pence at 292, after announcing current trading was mixed, with cooker sales down in most international markets.
HMV Group (LSE: HMV.L - news) fell 8-1/2 to close at 140-3/4 despite reporting rising sales and forecasting full-year profit will be at the upper end of the range of expectations. Dresdner Kleinwort downgraded the shares to 'hold' from 'add'.
Bearish broker comment hit a number of stocks, with a Goldman Sachs (NYSE: GS - news) downgrade to 'neutral' from 'buy' on valuation grounds sending Micro Focus International (LSE: MCRO.L - news) shares 12-1/4 pence weaker to 261.
And the same broker downgraded floor coverings provider Headlam to 'sell' from 'neutral', which saw the stock slide 7-1/4 pence to 398.
A pubs sector note from ABN Amro in which the broker cut its rating on JD Wetherspoon to 'neutral' from 'overweight' on valuation grounds sent shares in the company down 5-1/2 pence to 310.
Among the mid-cap risers, IMI (Milan: ISP.MI - news) was the top performer, closing up 26-1/4 pence at 504-1/2, after the group said its revenues for the four months to end-April 2008 show organic growth of around 7 percent, with all the five businesses contributing positively over the period.
Sticking with earnings news, Laird Group (LSE: LARD.L - news) was 4-1/2 pence firmer at 523-1/2 as the group said it has made a strong start to 2008, with trading in line with its expectations and that it expects to make further good progress in 2008.
Mid-cap oil producers also enjoyed gains, with Premier Oil (LSE: PMO.L - news) 5 pence better at 1,697, Hardy Oil & Gas 24 ahead at 823, and JKX Oil & Gas 6-1/2 higher at 507-1/2.
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