FTSE dips as Ireland worries pressure banks

By Simon Falush

LONDON (BestGrowthStock) – Banks pulled Britain’s top share index to a lower close on Friday as worries over the impact of the Irish debt crisis weighed on the sector, although the wider market had some support from a number of broker upgrades.

The FTSE 100 closed down 9.37 points, or 0.2 percent, at 5,871.75. However the index gained 1 percent on the week and is up for a third consecutive week bringing gains for the month to 6.2 percent so far.

Banks were the biggest drag on the index after Moody’s cut Ireland’s credit rating by five notches to Baa1 from Aa2, and said further downgrades could follow.

Lloyds Banking Group and Royal Bank of Scotland fell 3.6 percent and 5.7 percent respectively, with both pressured further after Lloyds announced it was expecting to take a further hit from impairments on its Irish business.

Also weighing on the market, AstraZeneca slipped 6.7 percent after its new heart medicine Brilinta failed to win approval from U.S. regulators.

However, the FTSE 100’s losses were limited, with the Irish credit rating downgrade not seen as having broader implications for the market.

“I don’t think it comes as a major surprise and there’s no change to the risk profile of Ireland to markets generally,” said Peter Dixon, economist at Commerzbank.

REAL ESTATE ROBUST

FTSE 100 real estate investment trust companies British Land

and Hammerson rose 0.8 percent and 1.4 percent respectively as Credit Suisse upgraded its stance on the sector to “overweight” in a strategy note.

Britain’s largest pub company Punch Taverns, which also has a big property portfolio was a strong gainer, up 11.7 percent after it said it was on track to meet full-year targets despite the unusually cold winter so far.

Software group Autonomy Corp climbed 5.3 percent, aided by an upgrade to its target share price by Panmure Gordon in a note that highlighted strong results from U.S. tech firms.

Aircraft and autos parts maker GKN rose 1.4 percent, adding to gains of 3 percent made on Thursday, helped by a rating upgrade from Societe Generale and ahead of a pre-Christmas trading statement.

However retailers were among the heaviest fallers, with Karen Olney, head of thematic strategy at UBS citing worries about high valuations, cost pressures and the impact on Christmas spending of further heavy snowfalls.

“Out of 30 sectors in Europe they are the third most expensive, having outperformed this year, so investors are locking in profits,” she said.

“There are worries about spending over the festive period with the weather not helping and rising input cost prices are pressuring margins.”

Next fell 1.8 percent, Marks & Spencer lost 1.7 percent and Sainsbury lost 1.6 percent.

Among midcaps, Dixons slipped 5.3 percent as UBS downgraded its rating on the electrical retailer to “neutral” from “buy” and kept its “underweight” stance on the non-food retail sector.

(Editing by Greg Mahlich)

FTSE dips as Ireland worries pressure banks