Wednesday March 26, 09:43 AM
London shares weaker early on as DJIA falls; Xstrata top FTSE 100 faller UPDATE
(Updating with full report)
LONDON (Thomson Financial) - Leading shares were weaker early on, with sentiment undermined after the DJIA fell following downbeat economic data after big rallies in the prior two sessions.
Xstrata
(LSE: XTA.L - news) led the blue-chip fallers, down nearly 10 pct, as Brazil's Vale said late Tuesday it has ended talks to buy its rival.
At 9.10 am, the FTSE 100 index was off 20.6 points at 5668.5, with the FTSE 250 (news) index up 27.1 points at 9821.7.
Volume was fair, with 266 mln shares changing hands in 80,771 deals.
In the US, the Dow Jones Industrial Average fell 16.04 points to 12,532.60, while the S&P 500 index rose 3.11 to 1,352.99, and the Nasdaq (NASDAQ: news) added 14.30 to 2,341.05.
A survey showing US consumer confidence slid to a five-year low in March while a measure of expectations for the future hit the weakest level in 35 years.
A separate report showed home prices slumped 10.7 pct from a year ago in major US cities as more air came out of the housing bubble.
In Asia, the Hang Seng (news) index closed up 152.49 points at 22,617.01, while the Nikkei 225 (news) index closed 38.59 points lower at 12,706.63.
Turning to commodity markets, oil prices were higher in Asian trade Wednesday ahead of the release of the US government's weekly energy stockpiles report.
In afternoon trade, New York's main contract, light sweet crude for delivery in May, rose 55 cents to 101.77 usd per barrel. The contract closed up 36 cents at 101.22 in floor trading Tuesday at the New York Mercantile Exchange.
London's Brent North Sea crude for May delivery climbed 32 cents to 100.92 dollars a barrel, after settling at 100.60 on Tuesday.
Back with UK equities, there was a mixed picture among the miners this morning, with Xstrata sharply lower, off 368 pence at 3,348, after Vale pulled out of bid talks, but with others, including Lonmin (LSE: LMI.L - news) , which took on 27 pence to 3,052, and Anglo American (LSE: AAL.L - news) , up 38 at 2,880, on the blue-chip leaderboard, supported by firm metal prices.
'(The miners) have proved pretty resilient bearing in mind the rest follow suit normally when a bid story like that (Xstrata) is pulled,' said Mark Priest from tradindex.com.
Elsewhere among miners, Kazakhmys (LSE: KAZ.L - news) headed the blue-chip leaderboard, taking on 5.06 pct, or 78 pence to 1,620. According to a report in the Financial Times, the government of Kazakhstan is considering swapping mining assets for a stake in Kazakhmys, its biggest copper producer.
Looking at scheduled news, shares in United Utilities (LSE: UU.L - news) fell 8 to 688-1/2, with Mark Priest from tradindex.com pointing to a touch of profit taking after a strong day yesterday, with the company saying in a trading statement today it sees in-line full-year results.
On the upside, shares in Sainsbury (LSE: SBRY.L - news) experienced good gains early on, 8-1/2 pence ahead at 345, after Britain's third-biggest supermarket 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.
Turning again to M&A news, JC Flowers is working on a fresh approach to Friends Provident (LSE: FP.L - news) the Financial Times newspaper reported without citing sources. Friends shares took on 2.6 pence to 126.1 in early deals.
A broker upgrade helped send shares in Cable & Wireless higher, up 2.4 pence to 141.2, 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 8-1/4 pence at 63-1/4 as Merrill Lynch (NYSE: MER - news) placed 47 mln shares in the department stores group in a range of 60-66 pence each, according to traders.
Meanwhile, Bellway (LSE: BWY.L - news) shed 16 pence to 795-1/4, 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.
For the half year ended Jan 31, the company said pretax profit was 96.9 mln stg, compared with 100.8 mln stg a year earlier, while revenue rose to 581.5 mln stg from 576.5 mln.
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.
A broker downgrade helped push shares in Hochschild Mining (LSE: HOC.L - news) 1-3/4 lower to 408-1/4, with JP Morgan cutting its rating to 'neutral' from 'overweight', noting that the valuation looks full, while lowering its target to 435 pence from 439.
On the upside, sticking with broker-related movements, Halma (LSE: HLMA.L - news) climbed 0-3/4 to 183, 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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