Worries over bad debts at Britain's biggest banks sent the FTSE lower this week. ICI jumps on disposal news, and LSE has rejected a further approach from Nasdaq.
London shares fell this week with oil banks dragging the FTSE lower. At mid morning on Friday the benchmark index was down 118 points to 6,073.
Biggest Movers in the FTSE 350 (as at Friday 10am)
Miners were in good form this week with Xstrata
(LSE: XTA)
putting on 3% to 2,222p, while Vedanta
(LSE: VED)
rose 5% to 1,296p on an upbeat forecast for commodity prices.
However, the strong performance by miners failed to make up for a poor showing by banks ahead of their reporting season over the next fortnight. There are worries that bad debts may take some of the gloss off their trading statements. HSBC
(LSE: HSBA)
lost 2% to 968p, Royal bank of Scotland
(LSE: RBS)
fell 2% to 1,859p, Barclays
(LSE: BARC)
shed 3% to 686p, and HBOS
(LSE: HBOS)
hobbled 3% to 1,052p. Collectively banks accounted for over a quarter of the FTSE 100 drop this week.
But shares in ICI
(LSE: ICI)
were some of the best performers this week after it sold its Quest flavouring business to Switzerland's Givaudan for £1.2b. ICI, which rose 11% to 433p, said the proceeds will be used to reduce debt and cut its pension deficit.
British Airways
(LSE: BAY)
climbed 1% to 485p on news that Australia's flag carrier Qantas has received an approach from Macquarie Bank. Meanwhile, London Stock Exchange
(LSE: LSE)
gained 8% to 1,316p when it received a £2.7b offer from Nasdaq
(NASDAQ: NDAQ)
, which it has rejected.
Kensington Group
(LSE: KGN)
plunged 14% to 784p after it said full-year profits would be at the low end of expectations. The sub-prime mortgage specialist said this was due to intense competition from new entrants and existing lenders. Meanwhile, Debt Free Direct
(LSE: DFD)
, which posted a 128% increase in interim profits, hardened 1% to 467 on in-line results.
ITV
(LSE: ITV)
shed 5% to 110p when it rejected a takeover from cable firm NTL
(NASDAQ: NTLI)
, which counts Sir Richard Branson as its biggest shareholder. Doubt over a successful merger between the ITV and NTL was brought to the fore when BSkyB
(LSE: BSY)
spent £940m on an 18% stake in the commercial broadcaster.
Elsewhere in the Branson business empire, Virgin Group has agreed to buy Victory
(LSE: VRY)
for £14m, sending shares in the cosmetic distributor 92% higher to 121p. Sticking with retailers, DSG International
(LSE: DSGI)
lost 8% to 200p after a trading update highlighted weak margins. Rival electrical retailer Kesa
(LSE: KESA)
also lost ground, down 2% to 355p, even though it said revenues at its Comet unit grew 12%.
Halfords
(LSE: HFD)
was stationary at 344p after it reported an in-line 8% rise in first-half profits, and Argos owner Home Retail Group
(LSE: HOME)
, dipped 1% to 413p despite a rise in first-half sales. Experian
(LSE: EXPN)
also failed to attract interest despite a 16% jump in earnings. Its shares fell 1% to 597p.
Other companies in the news included Johnson Service
(LSE: JSG)
, which tumbled 19% to 349p on a profit warning, and seafood restaurant chain Fishworks
(LSE: FSH)
sank 24% to 37p after a disappointing trading statement. WS Atkins
(LSE: ATK)
slumped 9% to 825p following a loss at its joint-venture Tube maintenance firm Metronet, while Sanctuary
(LSE: SGP)
dived 39% to 7p after a profit warning.
The Market Next Week
Barclays
(LSE: BARC)
will provide a trading update, and Old Mutual
(LSE: OML)
will report third-quarter numbers. Look out also for annual results from Character Group
(LSE: CCT)
and Kingfisher
(LSE: KGF)
.
Notable announcements next week
Monday: BSS, Homeserve, Hyder Consulting, RM and UBC Media
Tuesday: ASOS, Barclays, Character, GCap Media, Kingston Comm., Old Mutual
Wednesday: Anite, Antofagasta, Compass, Future and Sage
Thursday: Britvic, Goldshield, Holidaybreak, Jessop, QinetiQ and Sportingbet
Friday: Wolverhampton & Dudley Breweries
David owns shares in Barclays and GlaxoSmithKline.
