Leading UK shares closed lower on Monday, pressured by weak telecoms and bank shares as investors nervously eyed the week's approaching batch of inflation figures.
Mobile phone giant Vodafone was the day's biggest loser in the FTSE 100 index, down 2.5 percent, with some dealers pointing to an additional listing of shares in the group as having a dilutive effect on the share price.
Among banks Lloyds TSB fell 0.9 percent and Barclays lost 1.5 percent as investors continue to fret about inflationary pressures pushing up interest rates, which in turn could deter borrowing and trigger bad debt problems.
The FTSE 100 index closed down 34.3 points at 5,620.9, a relatively moderate move after last week's big swings, though market watchers say all eyes will be on UK and US inflation data on Tuesday and Wednesday for a steer on the short-term market direction. Volume was a modest 2.1 billion shares.
Britain's top share index has been yanked down more than 8 percent from near five-year highs since mid-May, taking part in a global equity sell-off on fears that inflation will prompt central banks to squeeze up interest rates.
"If it's a bad number from the US (on Wednesday) it will be a headline because people will decide that there's a greater chance that central banks will put up interest rates to a level that might overkill economic growth," said Andrew Bell, European Strategist at fund managers Rensburg Sheppards.
"We need to get these numbers out of the way," said a trader at a different house. "You can argue about just how important one month's numbers can be, but the market has been extremely sensitive to inflation worries. If it's much, much higher, we could drop a hundred points quite quickly, but I think you might find that people will come back and buy at that level."
Bell said he sensed that investors were not ready to make a decision about the medium-term market trend.
"I slightly more feel that the market wants to have a few months to size up what the outlook for the economic cycle is next year before it's willing to bet on the three-year-old bull market resuming without too major an interruption."
Bid talk bubbled up for a number of stocks, helping offset weakness among telecoms and banks, with medical devices maker Smith & Nephew up 0.6 percent on speculation US firm Bristol-Myers Squibb could be interested in a bid.
Retailer [GUS] closed up 0.6 percent on talk that US private equity groups were mulling an offer for the owner of retail chain Argos and US credit checking firm Experian. Both Smith & Nephew and GUS declined to comment.
Mid-cap listed jewellery retailer Signet climbed 2.9 percent as the company confirmed it had held preliminary talks about a possible merger with US rival Zale Corp.
In the utility sector, Centrica rose 1.3 percent on a weekend press report that said Gazprom had approached the UK government about ambitions to take a strategic stake in the owner of British Gas. Centrica has been the subject of persistent talk of bid interest from Gazprom.
On the mid-cap index, small-business landlord Workspace Group gained 7.5 percent after saying the value of its assets rose by a third.
Healthcare software firm iSoft continued to wobble, falling 1.3 percent as UBS cut its price target on the company. ISoft has been plagued by concerns over delays to a key project and accounting changes that cut the group's profit forecast.
Comments
Comments are closed.