BackFTSE drifts lower; retailers, pharmas weak
FTSE drifts lower; retailers, pharmas weak
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London: Britain’s top share index edged lower in early trade on Tuesday, as investors paused for breath after a sharp rise the previous session, with falls from retailers and pharmaceuticals offsetting strength among banks.
At 0907 GMT, the FTSE 100 was down 17.36 points, or 0.3%, at 5,482.98, having closed up 1.6% at 5,500.34 on Monday, its highest close since 2 September 2008 -- the month when Lehman Brothers collapsed.
The index posted a 22% rise in 2009, its biggest annual percentage increase since 1997.
The overall tone of markets remains upbeat after US data showed a fifth straight month of expansion in the manufacturing sector on Monday while figures also showed manufacturing activity in China growing at its fastest pace on record.
“The function at the moment is very much to build on the positive news," said Howard Wheeldon, strategist at BGC Partners.
“The Santa rally hasn’t quite finished yet. It will peter out during January but I don’t think the timing is quite right for that to occur just yet," he said.
Retailers were under pressure, with Next the biggest blue-chip faller, down 2.5%, after the fashion chain warned 2010-11 profits could be flat, even as it upgraded 2009-10 forecasts after a solid Christmas.
Marks & Spencer, which is due to issue a trading update on Wednesday, dropped 2%, while Tesco, J Sainsbury and Wm Morrison lost 0.8 to 2%.
Pharmaceutical stocks also suffered. AstraZeneca, GlaxoSmithKline and Shire dropped 0.7 to 1.7%.
Energy stocks went into reverse after notching up hefty gains the previous session, though with the price of crude edging up towards $82 a barrel as a cold snap in the key consuming regions of the United States and Europe boosted demand for heating fuel. Royal Dutch Shell, BP and BG Group shed 0.1 to 0.4%.
The mining sector was also on the back foot in the wake of Monday’s rise, despite a backdrop of firmer metals prices, with Eurasian Natural Resources, Kazakhmys and Antofagasta off 0.7 to 0.9%.
Among individual movers, Cadbury shed 1.6%.
Kraft Foods said it was raising the cash portion of its hostile £10 billion takeover offer for the British confectioner by 60 pence per share, funded by a deal to sell its North American pizza unit to Swiss food giant Nestle.
Separately, Nestle said it had no intention to bid for Cadbury, ending speculation about one potential rival bidder.
Banks were in favour, building on the previous session’s advance, with Royal Bank of Scotland, Lloyds Banking Group, and Barclays rising 0.3 to 2.6%.
Deutsche Bank, in a note, said Lloyds Banking Group and Barclays were among its top picks in European banks.
Man Group topped the FTSE 100 leader board, up 5.2%, as Nomura issued an upbeat note on the speciality finance sector, advocating a “buy" on the hedge fund group.
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