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Finance & Stock Market News
Glance-REFILE-Banks retreat nudges Britain's FTSE off highs
Mon, 19th Mar 2012 18:11
By Tricia Wright
LONDON, March 19 (Reuters) - Britain's top shares eased back
from last
after recent strong gains overshadowed a late-session recovery
from miners, with investors awaiting the next catalyst to drive
the market.
The benchmark FTSE 100 index closed down 4.47
points, or 0.1 percent, at 5,961.11.
Banks, which spearheaded the FTSE 100's recent jolt higher
in the aftermath of last Tuesday's U.S. bank stress tests, went
into retreat after London-listed lenders neared
overbought levels, according to their relative strength index.
Banks last week outperformed the other major sector indexes
on the FTSE 100 by a considerable margin, advancing 5.2 percent.
Sentiment in the sector was hurt as KPMG said banks faced
more pressure on profits, and Barclays Capital forecast
investment banking earnings to be down 15-20 percent this year.
Mining stocks clawed back losses from earlier
in the day to end in positive territory, tracking copper prices
higher, as recent encouraging U.S. economic data overshadowed
fears about demand from top consumer China, for now.
Hurting the miners, the key property sector in China has
cooled. Its home prices are down in February from January for a
fifth consecutive month, and are expected to continue heading
south in coming months.
'The demand picture for global commodities worries me and
does point to a slowing Chinese economy, which I find more
significant than improving data from the U.S., so I remain very
cautious,' said Lex van Dam, hedge fund manager at Hampstead
Capital, which manages $500 million of assets.
Uncertainty over the outlook for China, in fact, prompted a
downgrade on miners from JPMorgan - to 'neutral' from
'overweight' - with the bank urging some profit taking after the
sector's outperformance in the year to date.
'Clearly there will be rallies driven by the news of Chinese
policy easing, but we would use these as opportunities to reduce
into strength,' JP Morgan said.
A sharp slowdown in the Chinese economy could turn out to be
a positive for European equities broadly speaking, argued
Societe Generale, highlighting that a fall in the price of
commodities would lower raw material costs in developed markets.
If China's GDP growth falls below 7 percent per annum - a
scenario that SocGen describes as a 'hard landing' - the price
of commodities, especially oil, would also decline, enhancing
household purchasing power in the West, the bank said.
'It has been a fairly quiet European session with investors
mulling the next move after the strong gains of recent weeks,'
Michael Hewson, market analyst at CMC Markets, said.
'IMF chief Lagarde's weekend warning about the risks to the
global economy of rising oil prices has seen the market adopt a
wait and see attitude today, while a lack of new economic
drivers has seen volumes slip back.'
NATIONAL GRID WANES
National Grid was a significant faller, off 1.9
percent, after BofA Merrill Lynch downgraded its rating on the
energy distributor to 'neutral', partly on valuation grounds, in
a broadly bearish note on pan-European utilities.
BofA Merrill Lynch said National Grid's shares, which
recently broke through its 640 pence price objective, helped by
its defensive characteristics and emerging clarity on regulation
and dividend safety, may mark time until the end of the year.
The bank said progress in the RIIO (a new system which UK
regulator Ofgem will implement to render Britain's energy
network more sustainable) review has been encouraging so far,
and it still bets on an acceptable final outcome in December.
'Nevertheless, the initial proposals due in July are
unlikely to represent the regulator's best offer, and we cannot
preclude some uncertainty.'
BT Group was a good gainer, up 0.8 percent, after the
Sunday Times reported the telecoms firm was preparing to put up
to 1.5 billion pounds into its pension fund in an effort to
tackle a huge shortfall - and clinch a multi-million-pound tax
credit.
Oriel Securities estimated cash benefits of a large, early
top-up payment are a 22 million pounds early payment saving and
6 million pounds savings because the UK corporate tax rate is
set to reduce from 26 percent in 2011/12 to 25 percent in
2012/13.
'If this prediction comes true, we believe it will be a
clear incremental positive for BT's share price,' Oriel said.
(Additional reporting by David Brett)
(Editing by William Hardy)
(tricia.wright1@thomsonreuters.com)(+44 20 7542 8114)(Reuters)(Messaging:tricia.wright1.thomsonreuters.com)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LONDON, March 19 (Reuters) - Britain's top shares eased back
from last
week's 2012 highs on Monday, as weakness in banks
after recent strong gains overshadowed a late-session recovery
from miners, with investors awaiting the next catalyst to drive
the market.
The benchmark FTSE 100 index closed down 4.47
points, or 0.1 percent, at 5,961.11.
Banks, which spearheaded the FTSE 100's recent jolt higher
in the aftermath of last Tuesday's U.S. bank stress tests, went
into retreat after London-listed lenders neared
overbought levels, according to their relative strength index.
Banks last week outperformed the other major sector indexes
on the FTSE 100 by a considerable margin, advancing 5.2 percent.
Sentiment in the sector was hurt as KPMG said banks faced
more pressure on profits, and Barclays Capital forecast
investment banking earnings to be down 15-20 percent this year.
Mining stocks clawed back losses from earlier
in the day to end in positive territory, tracking copper prices
higher, as recent encouraging U.S. economic data overshadowed
fears about demand from top consumer China, for now.
Hurting the miners, the key property sector in China has
cooled. Its home prices are down in February from January for a
fifth consecutive month, and are expected to continue heading
south in coming months.
'The demand picture for global commodities worries me and
does point to a slowing Chinese economy, which I find more
significant than improving data from the U.S., so I remain very
cautious,' said Lex van Dam, hedge fund manager at Hampstead
Capital, which manages $500 million of assets.
Uncertainty over the outlook for China, in fact, prompted a
downgrade on miners from JPMorgan - to 'neutral' from
'overweight' - with the bank urging some profit taking after the
sector's outperformance in the year to date.
'Clearly there will be rallies driven by the news of Chinese
policy easing, but we would use these as opportunities to reduce
into strength,' JP Morgan said.
A sharp slowdown in the Chinese economy could turn out to be
a positive for European equities broadly speaking, argued
Societe Generale, highlighting that a fall in the price of
commodities would lower raw material costs in developed markets.
If China's GDP growth falls below 7 percent per annum - a
scenario that SocGen describes as a 'hard landing' - the price
of commodities, especially oil, would also decline, enhancing
household purchasing power in the West, the bank said.
'It has been a fairly quiet European session with investors
mulling the next move after the strong gains of recent weeks,'
Michael Hewson, market analyst at CMC Markets, said.
'IMF chief Lagarde's weekend warning about the risks to the
global economy of rising oil prices has seen the market adopt a
wait and see attitude today, while a lack of new economic
drivers has seen volumes slip back.'
NATIONAL GRID WANES
National Grid was a significant faller, off 1.9
percent, after BofA Merrill Lynch downgraded its rating on the
energy distributor to 'neutral', partly on valuation grounds, in
a broadly bearish note on pan-European utilities.
BofA Merrill Lynch said National Grid's shares, which
recently broke through its 640 pence price objective, helped by
its defensive characteristics and emerging clarity on regulation
and dividend safety, may mark time until the end of the year.
The bank said progress in the RIIO (a new system which UK
regulator Ofgem will implement to render Britain's energy
network more sustainable) review has been encouraging so far,
and it still bets on an acceptable final outcome in December.
'Nevertheless, the initial proposals due in July are
unlikely to represent the regulator's best offer, and we cannot
preclude some uncertainty.'
BT Group was a good gainer, up 0.8 percent, after the
Sunday Times reported the telecoms firm was preparing to put up
to 1.5 billion pounds into its pension fund in an effort to
tackle a huge shortfall - and clinch a multi-million-pound tax
credit.
Oriel Securities estimated cash benefits of a large, early
top-up payment are a 22 million pounds early payment saving and
6 million pounds savings because the UK corporate tax rate is
set to reduce from 26 percent in 2011/12 to 25 percent in
2012/13.
'If this prediction comes true, we believe it will be a
clear incremental positive for BT's share price,' Oriel said.
(Additional reporting by David Brett)
(Editing by William Hardy)
(tricia.wright1@thomsonreuters.com)(+44 20 7542 8114)(Reuters)(Messaging:tricia.wright1.thomsonreuters.com)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
