Bumper UK earnings fail to lift FTSE as bank sell-off weighs
BRITAIN’S top shares closed easier yesterday as a retreat from banks and investor caution ahead of US growth data offset a batch of robust UK corporate earnings from companies including AstraZeneca.
The FTSE 100 closed down 5.73 points, or 0.1 per cent, at 5,313.95, after it ended 0.9 per cent lower on Wednesday.
AstraZeneca advanced 2.7 per cent after the drugmaker doubled its 2010 share buyback programme, posted strong results and won an endorsement from a US advisory panel for its potential blockbuster heart drug Brilinta.
Reed Elsevier also notched up good gains, adding 3.8 per cent, after the publishing and events group said underlying revenues returned to growth in the first half, beating expectations.
“(UK) corporate earnings generally speaking have been fairly pleasing,” said Richard Hunter, head of UK equities at Hargreaves Lansdown.
“It’s now a question of getting the corporate results season out of the way and making sure there aren’t any more nasties on the economic front because obviously still in the background are concerns about the strength of the global economic recovery.”
BAE Systems, Europe’s largest defence contractor, climbed one per cent after it reported a 14 per cent rise in first-half earnings and said it expected to deliver growth in the full year.
BT added 3.5 per cent as the telecoms provider said it did not expect to be overly damaged by looming British spending cuts and repeated its full-year outlook.
And Vodafone rose 1.5 per cent as talk turned to plans for an initial public offering by the Indian telecoms venture between the British mobile telecoms provider and Essar Group. Essar said plans are at an initial stage.
Energy stocks were mixed, with Royal Dutch Shell reversing gains to end 0.2 per cent lower in the wake of its second-quarter results.
Banks were out of favour, retreating after an advance earlier in the session and following recent strong gains on relief after Europe’s recent stress tests.
Barclays was the worst off, shedding 1.5 per cent, while HSBC fell 1.1 per cent.
Rexam was the standout blue-chip decliner, shedding 3.4 per cent after Credit Suisse cut its rating following the firm’s first-half results.
Negative broker sentiment also weighed on British American Tobacco, off two per cent after Morgan Stanley cut its rating on the cigarette maker after it’s results.
“After an initial early lift from some positive blue-chip earnings updates, it has turned out to be something of a lacklustre day in the end,” said David Jones, chief market strategist at IG Index.
Earlier in the session, investors welcomed a drop in US weekly jobless claims. Initial claims for state unemployment insurance dropped by 11,000.