5.30pm: Spain weighs on blue-chips
The blue-chip index failed to take flight as misgivings around the outlook for the Spanish economy scotched the recent Santa rally. The FTSE 100 lost 9.03 to 5882.18 and the FTSE 250 shed 37 points to 11372.81.
Angus Campbell, head of sales at Capital Spreads, said:
"Despite the apprehension amongst European investors ahead of tomorrow’s key meeting between EU leaders who’ll be looking to resolve the eurozone debt crisis, investors remain content to buy good quality equities that won’t necessarily be hurt by any further bailouts."
He added:
"Banking stocks remain under pressure following the announcement by Moody’s that they’re reviewing Spain’s credit rating, but gains in other sectors kept the losses to a minimum."
As Moody’s said it may downgrade Spain’s debt rating, banks bore the brunt of traders’ anxiety with Barclays suffering the sharpest fall amid fears over its exposure to Iberian troubles. Also weighing on the bank were mutterings that following rights issues from Standard Chartered and Deutsche Bank, Barclays could also move to tap investors. Barclays fell 10 to 262p.
HSBC lost 10.6 to 66.1.p.
Also in the doldrums was Tullow Oil, despite the first oil from Ghana’s Jubilee field being celebrated on Wednesday. Analysts at Evolution Securities said the ceremony was a “timely reminder of how far Tullow has come in a very short space of time in Ghana with Jubilee on stream just three and a half years after its discovery”. But Tullow slid back 21p to £12.15.
Further down the market, HMV lost ½ to 34p as Nick Bubb, an analyst at Arden Partners, cut his stance to “add” from “buy” and reduced his price target to 40p from 74p.
He said the change of rating and forecasts came after last week’s “very poor interims and shock dividend cut”. “With the shares down to 35p, our confidence that the valuation of HMV was wrong has been shaken and it remains to be seen whether Alexander Mamut [the Russian billionaire] is throwing good money after bad, in increasing his stake to 5pc,” he added.
But Mr Bubb said he was not giving up on HMV completely because he thinks “something can be salvaged from the wreckage”.
“Plan A clearly hasn’t worked, with the core business failing to turnaround, but a Plan B that involves a break up or restructuring of the group (eg the potential sale of Waterstones and the monetisation of the Digital assets) should create some upside,” he added.
3.15pm: FTSE nudges into positive territory as Wall Street rises
The FTSE 100 edged nearer to positive territory in afternoon trading as Wall Street climbed into the black. The Dow Jones Industrial Average gained around 20 points to 11497.87. London's benchmark index edged up 2.7 points to 5893. A string of economic data painted a mixed picture of the US economy with consumer prices rising only 0.1pc in November which was much less than economists had forecast.
Data pointed to a modest rise in industrial production, with production of durable goods such as televisions increasing, but production of vehicles and parts declined. Back on this side of the Atlantic, there was little to excite investors as sovereign debt fears continued to weigh on sentiment.
As investors' risk appetite waned, defensives were amongst the biggest winners. Drug makers peppered the leaderboad, with AstraZeneca putting on 43p to £31.50 and GlaxoSmithKline gaining 14.5p to £12.72.
Further down the market, Portmeirion put on 50 to 457.5p as investors piled into the ceramics maker on hopes it will benefit from next year's royal wedding. The company said it would post forecast-beating full-year profits thanks to rapid export growth for brands such as a Spode as it gears up for the marriage of Prince William and Kate Middleton.
Portmeirion, which described demand for the upcoming white and gold Royal Wedding commemorative collection as unprecedented, said it would launch over 250 new products next year. Freddie George, an analyst at Seymour Pierce, upgraded his profit forecasts for next year from £4.5m to £5m due to stronger-than-expected performance from the US and Korea.
He added:
"We reiterate our Buy recommendation. The company controls four international premium brands, Portmeirion, Spode, Royal Worcester and Pimpernel; has significant potential to develop outside the core markets and to exploit the pattern books of SRW, and is valued at a significant discount to the luxury brands sector."
12.45: FTSE retreats on Spanish fears
The bluechip FTSE 100 index was down 0.3pc to 5871.28 shortly after midday, retreating after hitting its highest level for the year on Tuesday.
The broader FTSE 250 also declined, falling 0.6pc to 11,344.54.
Investors were increasingly concerned about the spreading debt crisis in the eurozone, after credit rating agency Moody's said it may cut Spain's rating from Aa1, because of the country's high funding requirements.
Barclays fell the most in the FTSE 100, down 2.7pc to 264.7p, and mining stocks Fresnillo and Rio Tinto also declined, falling 2.1pc and 1.3pc respectively. British Airways was another laggard, down 1.1pc after BA's unions said they would start polling cabin crew next week about a fresh wave of strikes. The ballot is due to last from Dec 21 to Jan 21.
In the FTSE 250, clothing retailer SuperGroup's shares dropped more than 17pc, their biggest fall since the company floated in March. The owner of the SuperDry brand said its margins shrank because of higher raw materials costs.
Leading stocks on the rise was Capital Shopping Centres (CSC). The owner of Lakeside in Essex got a £2.9bn takeover offer from Simon Property Group of the US.
That sent CSC's shares up 2.6pc to 406.7p.
The US company offered 425p in cash for CSC, after first making an indicative approch for CSC last month. In Asia, Japan’s Nikkei 225 Stock Average drifted between a gain of 0.2pc and a drop of 0.3pc, settling flat at around 10,316.59 by Japanese lunchtime.
The Bank of Japan’s quarterly Tankan index of sentiment at large manufacturers fell to 5 in December from 8 in September - the larger the number, the more positive the sentiment.
China’s stocks rebounded as a rally for coal producers pushed the benchmark index toward a fourth day of gains.
The Shanghai Composite Index advanced 0.2pc to 2,933.18. Yanzhou Coal Mining, China’s fourth-biggest coal miner, rose 4.2pc.
Hong Kong’s Hang Seng index fell for the first time in three days, declining 0.7pc to 23,265.41 as airlines dropped on concern of lower profit. For the latest updates PRESS CTR + D or visit Stock Market news Today
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