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Britain's bluechip share index rose by just a few points on Wednesday, consolidating around a four-month peak as a slide in a batch of stocks trading without their dividend entitlements offset gains in banking and mining stocks. Fifteen bluechip stocks traded ex-dividend on Wednesday including heavyweights Royal Dutch Shell, BP, AstraZeneca, GlaxoSmithKline, and Barclays knocking 25.41 points in total off the FTSE 100.
Standard Chartered, which was also trading ex-dividend, rebounded 7 percent after losing more than 20 percent over the previous two days after New York's regulator accused the London-based bank of hiding transactions tied to Iran. At the close, the UK bluechip index was up just 4.68 points, or 0.1 percent at 5,845.92, although that was its highest closing level since early April.
"It's been relatively neutral position-squaring today, we have seen a sell-off, which is a good thing given that we have rallied quite strongly recently," said Joshua Raymond, chief market strategist at City index. "If you look at the charts we are still looking primed, if we can break above 5,850 then we are looking at 5,900 and 6,000 again. But it's a case of when we do start to consolidate and profits are taken off the table, whether that invites people to buy back into the market," Raymond added.
The index showed little reaction to the Bank of England's sharp cut in its medium-term economic growth forecast for Britain in its latest inflation report. The bank said the factors that have dragged on growth since the financial crisis may persist longer than first thought.
Banks were the top bluechip performers as a sector, up after falls in the previous session after New York's top bank regulator accused Standard Chartered of hiding $250 billion in transactions tied to Iran, in violation of US law. The bank strongly denies the figure, saying only a tiny proportion of the Iran-related transactions totalling less than $14 million were questionable under US sanctions rules. Standard Chartered shares bounced 7.1 percent higher on Wednesday, paring back some of Tuesday's losses.
"While it is certainly true that this sharp drop has left the stock looking oversold, it is by no means clear that this represents a decent entry point," Bill McNamara, technical analyst at Charles Stanley, said in a note. "The allegations against the bank are extremely serious ... there might be value at this level, but substantial risks remain. Avoid."
Miners were strong performers, led by Rio Tinto which gained 2.9 percent after its first-half results came in at the better end of expectations. Rio saw a 34 percent drop in first-half profit, but said it was sticking to its $16 billion spending plans for the year. Peer Xstrata was also higher, up 1.8 percent after its well-received first-half results on Tuesday.
With the earnings season starting to draw to a close, out of the 84 percent of FTSE 100 companies that have reported so far, 56 percent have missed analysts' forecasts, while 44 percent have met or beaten expectations, according to Thomson Reuters StarMine data. Not all miners were higher, however, with India-focused Vedanta Resources shedding 2.1 percent following the surprising news that Rahul Dhir, the chief executive of Cairn India, is to step down on August 31. Vedanta completed a long, drawn out takeover of Cairn India in December 2011. Among other bluechip fallers, Smiths Group was the biggest casualty, down 3.4 percent as BofA Merrill Lynch downgraded its rating for the technology firm to "underperform" from "neutral", saying valuation looked full on its estimates.

Copyright Reuters, 2012

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