Wednesday March 26, 03:25 PM
London shares lower midafternoon; Xstrata down; US weaker on durable goods data
LONDON (Thomson Financial) - Leading shares were still weaker midafternoon, with Wall Street opening lower after durable goods orders fell and with Xstrata (LSE: XTA.L - news) remaining in the doldrums after bid talks ended.
At 2.52 pm, the FTSE 100 index was off 43.6 points at 5,645.5, having been in negative territory since the start of the session and as low as 5,639.1 at one point. The FTSE 250 was down 55.8 points at 9,738.8.
Volume was light, with 1.55 bln shares having changed hands in 537,711 deals.
Wall Street opened lower after US durable goods orders fell unexpectedly in February, as increased orders for civilian aircraft and computers were unable to offset a record decline in machinery orders.
The Commerce Department today reported February new orders for durable goods fell 1.7 pct. Excluding transportation, durable goods fell 2.6 pct. Goods excluding military equipment fell in the second consecutive month by 1.6 pct.
Economists polled by Thomson IFR Markets had expected orders to rise 0.7 pct for the month overall and to fall 0.4 pct excluding transportation goods.
An hour and a half after Wall Street opened, the Dow Jones Industrial Average was down 146.9 points at 12,385.7. The S&P 500 was 15.85 points lower at 1,337.15 while the Nasdaq Composite (NASDAQ: news) was down 33.71 points at 2,307.34.
Turning to UK equities, Xstrata continued to lead the blue-chip fallers, down 237 pence or 6.4 pct at 3,479, although off lows after Vale said late yesterday it has ended talks to buy its rival.
Merrill Lynch (NYSE: MER - news) and JP Morgan analysts remain bullish on the group's prospects, although Numis was less bullish and repeated its 'hold' stance and cut its target by 10 pct to 3,674 pence.
However, the news helped other miners gain as traders noted Vale would consider other potential takeover targets.
Anglo American (LSE: AAL.L - news) was up 100 at 2,942, Kazakhmys (LSE: KAZ.L - news) took on 57 pence at 1,599, Lonmin (LSE: LMI.L - news) was 85 higher at 3,110 and Rio Tinto (Frankfurt: 855018 - news) gained 35 at 5,020. But Eurasian Natural Resources Corporation was 6 lower at 970 on its FTSE 100 debut.
Among other fallers, pharmaceutical stocks were under pressure after Morgan Stanley (SPU - news) cut price targets on AstraZeneca (LSE: AZN.L - news) and GlaxoSmithKline (LSE: GSK.L - news) to 2,150 pence from 2,450 pence and to 1,161 pence from 1,391 pence respectively.
AstraZeneca was down 54 at 1,878 and GlaxoSmithKline dropped 23 to 1,051.
On the day of its re-entry to the FTSE 100, Tate & Lyle was 20 lower at 563.
Several stocks were going ex-dividend, including Wolseley (LSE: WOS.L - news) , down 24-1/2 at 526.
Turning to the upside, Sainsbury (LSE: SBRY.L - news) was 12-1/2 higher at 349 after reporting a 4.1 pct rise in fourth-quarter like-for-like sales excluding petrol and announced a joint venture with British Land (LSE: BLND.L - news) .
Market expectations for underlying sales growth in the quarter had ranged between 3.5 and 4 pct.
Peer WM Morrison was 2-3/4 higher at 274-3/4.
Vodafone (LSE: VOD.L - news) shares were 2.8 higher at 154.7 after the Financial Times said the mobile phone company had indicated it expects to start receiving dividends again from its joint venture in the US with Verizon Wireless.
A broker upgrade helped shares in Cable & Wireless rise 1.6 pence to 140.4, with UBS (Virt-X: UBSN.VX - news) upgrading its stance to 'neutral' from 'sell', following a 25 pct fall in the shares so far this year, while cutting its target to 140 pence from 150.
On the second tier, Debenhams (LSE: DEB.L - news) was the top faller, off 9-3/4 pence or 13.6 pct at 61-3/4, with Merrill Lynch placing 47 mln shares in the department stores group in a range of 60-66 pence each.
Bear Stearns (NYSE: BSC - news) reiterated its 'underperform' stance on the group following the placing.
Meanwhile, Bellway (LSE: BWY.L - news) shed 19-1/2 pence to 790-1/2. The housebuilder reported a 3.9 pct fall in its first-half pretax profit but said it remains confident of its long-term prospects.
The company also warned of a further fall in new home sales, with total legal completions for the year to end-July 2008 likely to be down by around 5-10 pct on the previous year.
Peer Bovis Homes Group was 27-1/2 lower at 570, though this was partly as a result of going ex-dividend.
On the upside, sticking with broker-related movements, Aquarius Platinum (LSE: AQP.L - news) was 36-1/2 higher at 696 after HSBC reiterated its 'neutral' stance on the group and raised its price target to 710 pence from 680.
Halma (LSE: HLMA.L - news) climbed 4-3/4 to 186-1/4 as Goldman Sachs (NYSE: GS - news) upgraded its stance to 'neutral' from 'sell', with an unchanged target price of 195 pence.
The broker pointed out Halma's significant exposure to private non-residential construction, which has been viewed as a risk, is now largely reflected in the price.
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