London shares down midday; NY seen sharply lower; UK miners, banks weigh

London shares down midday; NY seen sharply lower; UK miners, banks weigh

	Published : Mon, 22 Oct 2007 12:03 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading shares stayed lower midday, ahead of an expected second straight session of heavy losses on Wall Street, with UK miners and banks dragging heavily on the blue chips.

At 11.53 am, the FTSE 100 index slid 96.6 points to 6,431.3, slipping from a high of 6,527.9, and recovering from a low of 6,413.4, with the FTSE 250 index off 194.3 at 11,105.

Volume was weak, with 861 mln shares changing hands in 242,913 deals.

'(We are ) still very much at the tail of the subprime (fallout), but better situated than a few weeks ago. We have had a few (US) numbers on the table, but of course there are a few more to come,' said Richard Hunter, head of UK equities at Hargreaves Landsdown.

Looking ahead to Wall Street, US stocks are expected to open sharply lower on concern the recent spike in oil prices and the fallout over the summer crisis in the credit markets may be threatening economic growth.

Investors are hoping earnings out of Merck and Schering-Plough can provide some comfort after a decidedly mixed set of quarterly results last week.

According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down 119 points at 13,403. Separately, S&P 500 futures were off 10.70 points at 1,495.10 while Nasdaq 100 futures fell 15 points to 2,134.75.

Turning to UK equities, mining stocks weighed, against a background of falling commodity prices and negative broker comment from Citigroup, which cut five miners to 'hold' from 'buy' on valuation grounds following the shares' strong rally since August.

Among those downgraded was Anglo-American, which slipped 136 pence to 3,064, BHP Billiton, down 70 pence to 1,765, Kazakhmys, 52 pence lower at 1,482, Rio Tinto, which lost 166 pence to 4,040, and Vedanta Resources, 92 pence lighter at 2,071.

Banks were also under the cosh, after Credit Suisse told clients to avoid the sector citing the deterioration of the UK housing market.

Lloyds TSB, which the broker cut to 'neutral' from 'outperform', lost 6 pence to 530-1/4, Alliance & Leicester, which Credit Suisse rated 'underperform', slipped 7 pence to 726-3/4, and HBOS, which it kept as 'neutral' while cutting its target to 1,025 pence from 1,080, dropped 10 pence to 825.

But continuing to lead the blue-chip fallers in midday deals, and extending this morning's losses, was British Energy, off nearly 10 pct or 57-1/2 pence at 521-1/2 after saying the start-up of its Hartlepool 1 Reactor has been delayed due to complications during a planned inspection of its boiler units.

As a precaution, the company has also closed sister units at Hartlepool and Heysham, with four units down in total.

And Scottish & Southern shares experienced a dip too, down 11 pence at 1,521, after it emerged it has bought a 30 pct stake in Vital Energi for 6 mln stg.

Also on the back foot were shares in J Sainsbury, off 9 pence at 573-1/4, after the Mail on Sunday reported, citing sources close to the deal, the 10.6 bln stg takeover of the supermarket giant may be in doubt as Qatari suitor Delta Two turns its attention back to its financing, which may not be as secure as previously thought.

Bucking the trend was Northern Rock, which headed the FTSE 100 leaderboard, up 5.8 pence at 192.7, following news former Standard Chartered chairman Bryan Sanderson has taken over as chairman after the Financial Services Authority granted him 'approved person' status.

The FSA said in a statement Sanderson's appointment, announced on Friday, had 'become effective'.

Strength in Pearson was a feature as well, 14 pence ahead at 779, after lifting full-year guidance for its education segment as underlying sales across the group in the first nine months rose 6 pct and underlying profit lifted 20 pct.

The company said in a third-quarter update all its businesses are currently trading in line with, or ahead of, previous guidance, as it looks towards the important fourth-quarter selling season for higher education and consumer publishing.

Turning to the second line, AGA Foodservices slipped 21-1/2 pence to 405-1/4 after a flurry of downgrades following its decision to sell its foodservice business to private Italian company Ali for 260 mln stg in cash.

Citigroup downgraded its stance in the group to 'hold' from 'buy', while traders reported Merrill Lynch had also cut AGA to 'neutral' from 'buy'.

On a brighter note, shares in food and beverage equipment maker Enodis climbed 27-3/4 to 216-1/4, with Investec raising its target to 258 pence from 21 and reiterated its 'buy' stance.

It said the company justifies a premium to its peer group given its technological leadership, global footprint, brand strength, breadth of product portfolio, operating margins, cash flow generation, recent delivery and dividend yield.

tf.TFN-Europe_newsdesk@thomson.com

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