Bskyb Share News (BSY)

Thu, 14th Jun 2012 17:05

* FTSE 100 index down 0.3 percent

* Euro zone crisis, Greek polls in focus

* Merger concerns hit Glencore, Xstrata



By Toni Vorobyova

LONDON June 14 (Reuters) - British blue chips dipped on

Thursday, edging down towards recent six-month lows as a surge

in Spanish bond yields to record highs cast the spotlight back

onto the problems in top trading partner the euro zone.

Uncertainty ahead of Greek elections at the weekend - which

may decide whether the country stays in the euro zone or opts

for an exit with unpredictable contagion risks for the rest of

Europe - kept investors on edge and on the sidelines.

Moody's slashed its rating on Spain by three notches, saying

the newly-approved euro zone rescue plan for its banks will

increase the country's debt burden. Spain's 10-year bond yields

hit a euro area record of 7 percent - a psychologically key

level, whose breach for Greece, Portugal and Ireland was

followed by bailout requests.

The FTSE 100 closed down 0.3 percent, or 16.76

points, at 5,467.05, wiping out its gains from earlier in the

week, and just over 200 points above its June 1 trough around

5,230, which was its lowest since late November 2011.

'The truth lies in the performance of the peripheral

European bond yields,' said Jeremy Batstone-Carr, strategists at

Charles Stanley.

'The UK won't escape unscathed because we too have a very

high debt to GDP ratio.'

Fund managers have stepped up their net underweight on UK to

16 percent from 9 percent in tandem with turning more negative

on the euro zone, according to the latest monthly survey from

Bank of America Merrill Lynch.

Technicals also pointed to more weakness, with strategists

at SEB highlighting 4,800 to 5,000 as the next target area.

MERGERS, GAMES

Heavyweight miners led the retreat on Thursday,

as investors fretted about the impact of the crisis on global

economic growth and thus demand for metals.

Glencore and Xstrata fell 4 and 2 percent,

respectively, weighed down by concerns about whether they will

be able to pull off a plannned merger.

'With major Xstrata shareholders having publicly voiced

their dissatisfaction to these proposed remuneration packages,

we see heightened risk that the merger may be voted down if

voted on in its current configuration,' strategists at Liberum

Capital said in a note this week.

'If the deal breaks and Xstrata trades back to parity with

the sector, we believe a 30 percent fall for Xstrata shares and

a 10 percent fall for Glencore is feasible.'

Also among the top fallers was hedge fund manager Man Group , which fell 3.6 percent ahead of its last day in the

FTSE on Friday, and BSkyB, which dropped 3.2 percent.

The satellite broadcaster paid more than expected to

broadcast most of the English Premier League soccer matches in a

new three-year deal. Shares in telecoms operator BT,

which won the right to show some of the games and competition

from which was seen as the reason for the higher price tag, fell

3.3 percent.

'This (deal) outcome comes as a negative surprise and we

believe market expectations were for a favourable outcome. With

increased competition from BT and downside risk to estimates, we

would expect a negative reaction in the share price,'

strategists at UBS said in a research note.



(Reporting By Toni Vorobyova; Editing by Catherine Evans)

(antonina.vorobyova@thomsonreuters.com)(+44 207 542 9828)(Reuters Messaging: antonina.vorobyova@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.