Interdealer broker ICAP is likely to be relegated from London's blue chip FTSE 100 index in this week's quarterly reshuffle as low volumes in financial markets take their toll. ICAP blamed a slowdown in broking activity for a 9 percent drop in first-quarter revenue in a trading update in July, as the sluggish global economy and euro zone debt crisis prompted many to shun financial markets.
Concerns about further regulation for banks - ICAP's core clients - in the aftermath of the LIBOR rate-rigging scandal have also had an impact on the company's earnings outlook.
Since the last FTSE review, on June 6, ICAP shares had drifted 0.7 percent lower by Monday's close, underperforming a 7.6 percent rise by the FTSE 100 index over the same period. Demotion from the index will result in selling of stock by FTSE 100 tracker funds.
Fellow financial firm Ashmore, whose shares have slipped 0.5 percent since the last review, is set to be dropped from the FTSE 100 after one year on the index.
The emerging markets fund manager said on Tuesday it was earning lower fees on the money it manages, underlining how greater competition and a shift towards less lucrative products is hitting margins in its specialist sector.
Index compiler FTSE will formally announce the changes to the FTSE UK index series after the market close on Wednesday, using the close-of-play data from Tuesday September 11. The pair stand to be replaced by energy services company John Wood Group, which will rejoin the large-caps after a year's absence, and buyout group Melrose, in what will be its maiden appearance on the FTSE 100 index.
Wood Group's shares have jumped more than 23 percent since the last review, against an 11.9 percent rise for the mid-cap FTSE 250 index, driven in part by the potential for substantial further acquisitions. Melrose, meanwhile, has seen its shares rise more than 10 percent over the period, helped by the acquisition of German meter maker, Elster Group.
The likely promotion of Wood Group would modestly increase the heavy share of oil-related companies on the FTSE 100.
The integrated oil & gas sector represents 18.3 percent of the index, based on Monday's closing prices, while oil explorers & producers make up 0.9 percent.
All these likely changes to the indexes are based on the individual companies' market capitalisations at the close on Monday, September 10, according to information provided by FTSE. FTSE 250 constituents that grow to rank among the 90 largest by market capitalisation are eligible for potential inclusion in the FTSE 100 index.
Meanwhile, FTSE 100-listed firms whose market cap falls to 111th position or below among all FTSE index constituents are eligible for demotion to the FTSE mid-cap 250 index. Three other changes are likely to the mid-cap index, according to FTSE, with online software group Playtech a potential new entry, and TV decoder maker Pace, alongside SuperGroup, owner of the Superdry fashion brand, expected to be promoted from the FTSE Small Cap index.