Friday May 9, 12:39 PM
London shares lower midday as Dow set for sharp falls; financials weigh
LONDON (Thomson Financial) - Leading shares remained weaker midday with the Dow set for sharp falls, Carphone Warehouse (LSE: CPW.L - news) amid ongoing strategy and cost concerns and with the financial sectors adding to the gloomy mood.
At midday, the FTSE 100 index was 86 points lower at 6,185.5, while the FTSE 250 (news) index was down 126.7 points at 10,423.07.
Spread bettors, IG Index, said the Dow looks set to fall 115 points as the high oil price, weak numbers from AIG and reports Citigroup (NYSE: C - news) is considering selling $400 billion in non-core assets to restore profit growth also unsettled investors.
Carphone Warehouse was the main 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.
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.
Elsewhere, financials were out of favour after U.S. insurer AIG said it swung to a first-quarter loss of $7.81 billion because of losses tied to credit swaps and mortgage-related operations and Allianz warned the environment is making it increasingly difficult for the group to meet its targets.
Aviva (LSE: AV.L - news) lost 14-1/2 pence at 632-1/2, Friends Provident (LSE: FP.L - news) was off 2.1 at 116.9, and Prudential fell back 8-1/2 at 701.
Banking stocks were also in the doldrums, with HSBC 15-1/2 pence lower at 866 as Morgan Stanley (SPU - news) downgraded the group to 'underweight' from 'equal-weight'.
Other banking plays also extended Thursday losses, with Barclays (LSE: BARC.L - news) down 9-3/4 pence at 453-1/4, Royal Bank of Scotland (LSE: 91ID.L - news) off 13-1/2 at 343-3/4, HBOS (LSE: HBOS.L - news) 16-1/2 weaker at 497 and Lloyds TSB 14 pence lower at 429-3/4.
Among just a handful of blue-chips making headway Friday midmorning, GlaxoSmithKLine (LSE: GSK.L - news) added 3 pence to 1,137 pence thanks to its defensive qualities. Shares were further boosted by a bullish comment from ING. The broker repeated its 'buy' stance after a company visit.
Thomas Cook (LSE: TCG.L - news) added 0-1/4 pence to 273-1/2 after Credit Suisse upgraded the shares to 'outperform' from 'neutral'.
Among other broker changes, Sage Group (LSE: SGE.L - news) gave back some of the previous session's gains, down 12-1/2 pence at 214 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 12-1/2 pence to 626.
And Johnson Matthey was down 48 pence at 1,909 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.
Turning to the mid-caps, AGA Foodservice Group (LSE: 386132.L - news) led the casualties, down 13-1/4 pence at 293-1/4, 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 11 pence weaker to 263.
And the same broker downgraded Headlam to 'sell' from 'neutral', which saw the stock slide 11-1/2 pence to 393-3/4.
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 pubs operator down 5-1/2 pence to 310.
Among other mid-cap risers, IMI (Milan: ISP.MI - news) was the top performer, up 6.33 percent or 30-1/4 pence at 508-1/2, 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 pence firmer at 523 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.
Again, as with blue-chips, mid-cap oil producers also enjoyed gains, with Premier Oil (LSE: PMO.L - news) 21 pence better at 1,713, Hardy Oil & Gas 31 ahead at 830, and JKX Oil & Gas 2-1/2 higher at 503-1/2.
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