Friday May 9, 03:14 PM
London shares lower midafternoon; financials down; Wall Street opens weaker
LONDON (Thomson Financial) - Leading shares remained weaker midafternoon, with Wall Street opening sharply lower, hurting UK companies across the board, including financials.
At 2.51 p.m., the FTSE 100 index was 74.2 points lower
at 6,196.6, up from the session low of 6,167.6, while the FTSE 250 (news) index was down 96.7 points at 10,453.1.
In the U.S, the Dow Jones Industrial Average was off 96.1 points at 12,770.7 in early trade.
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.
The S&P 500 was down 9.85 at 1,387.83, while the Nasdaq Composite (NASDAQ: news) was off 14.25 at 2,436.99.
U.K. financial plays also suffered.
Aviva (LSE: AV.L - news) fell 17 pence to 630, Friends Provident (LSE: FP.L - news) was off 2.6 at 116.4, and Prudential fell back 15-1/2 at 694.
Banking stocks were also in the doldrums, with HSBC 20-1/2 pence lower at 861 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 16 pence at 447, Royal Bank of Scotland (LSE: 91ID.L - news) off 13-3/4 at 343-1/2, HBOS (LSE: HBOS.L - news) 14-1/2 weaker at 499 and Lloyds TSB 13 pence lower at 430-3/4.
The heavyweight mining sector was also dragging the index lower, though the picture for metals was mixed, with gold and platinum was higher, while copper was lower.
Vedanta Resources (LSE: VED.L - news) was 106 lower at 2,391; Xstrata (LSE: XTA.L - news) was off 133 at 4,174; Antofagasta (LSE: ANTO.L - news) was 25 at 784-1/2.
Carphone Warehouse (LSE: CPW.L - news) was still the biggest casualty on the U.K.'s Blue Chip index, after announcing Thursday that Best Buy is to acquire 50 percent of the group's Distribution business for 1.1 billion pounds.
The shares were off 20-1/4 at 268-3/4,
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 11-1/2 pence at 215 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 9 pence to 629-1/2.
And Johnson Matthey was down 45 pence at 1,912 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 was down 9-1/2 at 229. The company reports full-year results on Friday.
Only six shares in the FTSE 100 were up more than 1 percent midafternoon. Among them was consumer goods giant Unilever (LSE: ULVR.L - news) , 21 higher at 1,773, 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 10 pence at 296-1/2, after announcing current trading was mixed, with cooker sales down in most international markets.
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 12-1/2 pence weaker to 260-3/4.
And the same broker downgraded floor coverings provider Headlam to 'sell' from 'neutral', which saw the stock slide 10-1/2 pence to 394-3/4.
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 5-3/4 pence to 309-3/4.
Among other mid-cap risers, IMI (Milan: ISP.MI - news) was the top performer, up 28-1/4 pence at 506-1/2, 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 5 pence firmer at 524 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) 12 pence better at 1,704, Hardy Oil & Gas 31 ahead at 830, and JKX Oil & Gas 9-1/2 higher at 510-1/2.
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