Britain's top shares suffered their biggest drop in six weeks on Thursday as a cautious trading update from insurer Prudential and weak media stocks overshadowed positive earnings news overseas.
Prudential, Britain's second-largest insurer, fell 2.7 percent after it reported a drop in new sales and remained tight-lipped over a possible sale of its 79 percent stake in online bank Egg. Egg shares dipped 1.8 percent.
The FTSE-100 share index closed down 34.4 points, or 0.8 percent, at 4,476.8, its biggest fall since December 10.
The FTSE hit an 18-month peak of 4,531.4 in early trading but reversed to end at its lowest level this week as generally positive US earnings failed to excite Wall Street.
"Shares have risen in anticipation of good profits in the United States. We're getting those good profits but not enough in terms of the outlook statements to drive share prices on," said Jeremy Batstone, director of investment strategy at stockbrokers Fyshe Group. "So the impression is of a market that's churning sideways."
Mounting expectations that UK interest rates will rise next month created another headwind after a survey showed the economy expanded strongly in the fourth quarter of 2003 as manufacturing recovered and service sector growth accelerated.
Renewed weakness in the dollar was another drag for UK firms exposed to the US currency, threatening to crimp their reported earnings.
Publisher Pearson fell 4.1 percent and advertising giant WPP slipped 2.4 percent, while the dollar also weighed on oil stocks and drugs giant GlaxoSmithKline, down 2.1 percent.
AstraZeneca topped the FTSE leader board with a 2.2 percent rise as asset manager Capital Group increased its stake in the Anglo-Swedish drug maker to 15.1 percent.
AstraZeneca, which reports in dollars, also attracted interest before its full-year results next week, which are expected to show the company benefiting from the weakness of the dollar, plus a positive report on its drug Crestor.
Mobile operator mmO2 also defied the drift lower and climbed 1.5 percent to 83 pence after dealers said its house broker Cazenove had increased its price target on the stock to 95p.
Though top mobile phone maker Nokia reported strong demand, the reaction from telecom shares was muted. However, upbeat comments from the Finnish company on networks helped telecom equipment testing firm Spirent climb 2.7 percent.
Office rental firm Regus led mid-cap stocks with a 6.1 percent jump on talk that a major shareholder had cut its stake in the firm at a price above Wednesday's close.
But oil services provider John Wood tumbled 7.9 percent, handing back all of its gain one day earlier, after Credit Suisse First Boston repeated an "under-perform" rating on the stock, citing a slowdown in the pace of contract awards in its engineering and production facilities unit and an expected drop in profit margins in gas turbine services.
Comments
Comments are closed.