Bid talk pushes Dana higher as FTSE 100 loses its grip
A retreat in miners and banks offset strength in defensive utilities and food retailers yesterday, pushing the FTSE 100 lower by 0.7 per cent lower, ending four consecutive sessions of gains.
The index closed 36.74 points lower at 5,345.93, giving back some gains from the previous session when shares hit a 14-month closing high.
Mid-cap Dana Petroleum was buoyed in morning trading as speculation swirled around the market of an imminent bid from BP at 1,700p to 1,800p per share. The stock rose as high as 1,330p, from its opening price of 1,266p, before closing 2 per cent up at £12.93 after an approach failed to materialise.
Mining stocks were under pressure as metals prices fell off their recent highs after the dollar recovered from previous losses. Anglo American, Eurasian Natural Resources, Lonmin and Xstrata shed between 1.6 to 3.3 per cent.
“Today we’re seeing a bit of a realisation that yesterday we may have gone a bit too far,” said Angus Campbell, head of sales at Capital Spreads.
“Confidence is very much apparent but we have to see whether these levels can be sustained,” he added.
The banking sector was led lower by falls in heavyweight HSBC, which shed 2.1 per cent, while Barclays and Standard Chartered lost 2.8 and 1.6 per cent.
Prominent US analyst Meredith Whitney’s bearish comments on banks also hit the sector.
Bucking its weaker peers, part-nationalised Lloyds Banking Group and Royal Bank of Scotland added 0.6 and 0.9 per cent respectively.
Big banks stepped up warnings that tightening capital rules too soon could stall economic recovery, but policymakers said the bailed out sector cannot rely on taxpayers again in future.
Among individual fallers, insurance-focused takeover vehicle Resolution lost 3.3 per cent on concerns over a potential rights issue to fund the company’s next acquisition.
Intertek slipped 2.8 per cent after the testing and inspections group posted a 28 per cent rise in revenue for the 10-month period but said the rate of organic revenue growth was slowing. A ratings downgrade to “outperform” from “buy” by Seymour Pierce also weighed on the stock.
As risk appetite waned, defensive utility stocks found some support. Centrica added 1.7 per cent as gas prices recovered from a decline last week. Severn Trent, and United Utilities put on 1 and 0.8 per cent respectively.
Defensive supermarket chains WM Morrisson, Sainsbury and Tesco were up 0.4 to 1.2 per cent.
Cable & Wireless was up 1.7 per cent after the telecoms group said it planned to raise around £200m via the bond market as part of a refinancing to push through a demerger by April next year.
ICAP, the world’s biggest interdealer broker, rose 3.2 per cent after reporting first-half results, with Numis upgrading the stock to “hold” from “reduce” as revenues beat its expectations, while profit fell just short of forecasts.