Wednesday March 26, 10:38 AM
London shares lower midmorning; Xstrata weaker after bid talks with Vale end
LONDON (Thomson Financial) - Leading shares were weaker midmorning as investors still remained jittery about the state of the economy with Xstrata (LSE: XTA.L - news) in the doldrums after bid talks ended, offsetting gains in Sainsbury (LSE: SBRY.L - news) as a trading update revealed strong sales growth.
At 10.11 am, the FTSE 100 index was off 33.2 points at 5,655.1, with the FTSE 250 (news) index up 19.3 points at 9,813.8.
Volume was fair, with 472 mln shares changing hands in 148,076 deals.
'The market is heavily influenced by the US although the situation seems to be starting to calm around the credit crisis and the banks there is still concern regarding the economy,' said Ed Menashy, UK strategist at Charles Stanley.
'After a day of gains, hedge funds have been selling off their positions and profit takers have come in,' added Menashy.
Turning to UK equities, Xstrata led the blue-chip fallers off 326 over 8 pct at 3,390 as Brazil's Vale said late Tuesday it has ended talks to buy its rival.
However, all miners were not on the downside. Kazakhmys (LSE: KAZ.L - news) took on 49 pence at 1,591 after a report in the Financial Times, said the government of Kazakhstan is considering swapping mining assets for a stake in the group, its biggest copper producer.
Firmer metal prices also supported the sector Lonmin (LSE: LMI.L - news) took on 65 at 3,090 and Anglo American (LSE: AAL.L - news) was up 19 at 2,861.
Back to the 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 1,161 pence from 1,391 pence, respectively.
AstraZeneca was down 47 at 1,885 and GlaxoSmithKline lost 18 at 1,056.
Turning to the upside, Sainsbury was the top riser up 14-3/4 at 351-1/4 after the group reported a 4.1 pct rise in fourth-quarter like-for-like sales excluding petrol, suggesting the industry remains resilient in the face of concerns over the general consumer environment.
Market expectations for underlying sales growth in the quarter had ranged between 3.5-4 pct.
Its peer WM Morrison was 4 higher at 276.
In M&A news, Friends Provident (LSE: FP.L - news) gained 1.8 at 125.3 after the Financial Times reported that JC Flowers is working on a fresh approach for the group.
A broker upgrade helped shares in Cable & Wireless tick up 2.1 pence to 140.9, 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 8-3/4 pence at 62-3/4 with Merrill Lynch (NYSE: MER - news) placing 47 mln shares in the department stores group in a range of 60-66 pence each.
Meanwhile, Bellway (LSE: BWY.L - news) shed 8 pence to 802, as 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 today 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 5.0-10.0 pct on the previous year.
Peer Bovis Homes Group was 30 lower at 567-1/2.
On the upside, sticking with broker-related movements, Halma (LSE: HLMA.L - news) climbed 4-1/4 to 185-3/4, 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 that 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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