Wednesday March 26, 12:12 PM
London shares weaker midday; NY seen lower; Xstrata falls as Vale bid talks end
LONDON (Thomson Financial) - Leading shares were weaker midday as Wall Street is seen opening lower with Xstrata (LSE: XTA.L - news) remaining
in the doldrums after bid talks end offsetting gains in other miners on talk they could be Brazillian Vale's next takeover target.
At 11.50 am, the FTSE 100 index was off 32.8 points at 5,656.3, with the FTSE 250 (news) index up 10.4 points at 9,805.
Volume was light, with 841 mln shares changing hands in 265,656 deals.
'The UK market is taking a bit of a breather after yesterdays 193 point gain. The FTSE is currently down mainly in anticipation of a weaker open in the US markets,' said Nick Mitchell, a trader at CMC Markets.
'The biggest story in the markets this morning is the news of a breakdown in talks between Vale and Xstrata. However, a number of other companies in the mining sector have had a positive reaction in their share price on the back of the Xstrata news. Vale have stated that they would look at other potential takeover targets,' added Mitchell.
Over in the US, Wall Street is looking at a lower opening ahead of housing data and a report on durable goods orders, with a speech from Treasury Secretary Henry Paulson also likely to garner attention.
According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down 44 points at 12,488. Separately, S&P 500 futures fell 3.80 points to 1,347.60 while Nasdaq 100 (NASDAQ: news) futures were off 3 points at 1,823.
Turning to UK equities, Xstrata led the blue-chip fallers down 296 nearly 7 pct at 3,419 although off lows as 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 that Vale would consider other potential takeover targets.
Anglo American (LSE: AAL.L - news) was the top riser, up 12, at 2,968, Kazakhmys (LSE: KAZ.L - news) took on 59 pence at 1,601, Lonmin (LSE: LMI.L - news) ticked up 71 at 3,096, BHP Billiton (LSE: BLT.L - news) was 14 higher at 1,44 and Rio Tinto (Frankfurt: 855018 - news) gained 38 at 5,023.
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 49 at 1,883 and GlaxoSmithKline lost 19 at 1,055.
Turning to the upside, Sainsbury (LSE: SBRY.L - news) was 12-1/4 higher at 348-3/4 after the group reported 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 3.5-4 pct.
Its peer WM Morrison was 0-3/4 higher at 272-3/4.
Vodafone (LSE: VOD.L - news) shares added 4.4 at 156.3 after the Financial Times said the mobile phone company had indicated that it expected to start receiving dividends again from its joint venture in the US with Verizon Wireless.
In M&A news, Friends Provident (LSE: FP.L - news) gained 1.3 at 124.8 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 2.2 pence to 141, 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 11-3/4 pence at 59-3/4 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 17 pence to 793, 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 33 lower at 564-1/2.
On the upside, sticking with broker-related movements, Aquarius Platinum (LSE: AQP.L - news) were 30-1/2 higher at 690 after HSBC reiterated its 'neutral' stance on the group and raised its price target to 710 pence from 680 pence.
Halma (LSE: HLMA.L - news) climbed 4 to 185-1/2, 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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