FTSE down as recovery worries overshadow M&A glut

* FTSE falls 1.3 pct as global recovery worries mount

* Corporate results disappoint, CRH warns on U.S.

* Miners, energy firms down with commodities, outlook

By David Brett

LONDON, Aug 24 (BestGrowthStock) – Britain’s leading share index
fell sharply early on Tuesday, with a bearish mood over the
health of the global economic recovery more than offsetting
bullish sentiment from recent mergers and acquisitions activity.

By 0808 GMT, the FTSE 100 (.FTSE: ) was down 68.13 points, or
1.3 percent, at 5,166.71, having gained 0.8 percent at 5,234.84
on Monday, albeit in light volumes.

London’s blue chips echoed falls overnight on Wall Street,
while the Japan’s Nikkei hit a 15-month closing low as worries
over the sustainability of the economic recovery returned to
haunt markets.

Irish building supplies giant CRH (CRH.I: ) warned core
earnings would fall 10 percent this year, pointing to mounting
concerns over the economy in the United States.

In the UK, the world’s largest builders merchant
distributor, Wolseley (WOS.L: ), which has substantial exposure to
the United States, was one of the top FTSE 100 fallers, down 3.3
percent.

“Corporate news has been disappointing today. CRH’s results
had a negative read across for the sector and also ancillary
companies,” Jeremy Batstone Carr, head of research at Charles
Stanley said.

WPP (WPP.L: ), the world’s largest ad firm by sales, which
also has heavy exposure to the United States, fell 2.7 percent
even though it lifted its outlook for the year after posting a
3.1 percent rise in key organic revenue.

Investors will closely watch U.S. Existing Home Sales for
July and the U.S. Richmond Federal Manufacturing survey for
August, both due at 1400 GMT, for further signs as to the health
of the world’s biggest economy.

COMMODITY RETREAT

Mining and energy shares fell along with commodity prices as
demand concerns clouded the outlook.

India-focused mining group Vedanta Resources (VED.L: ) shed
5.3 percent after India’s environment ministry rejected a plan
by Vedanta to mine bauxite in an eastern state, saying it
violated forest laws. [ID:nSGE67N06M]

Vedanta is already facing regulatory hurdles in its bid for
control of Cairn India (CAIL.BO: ), a potential deal valued at
$9.6 billion that could give the group a slice of India’s oil
reserves.

However, India’s state-run Oil and Natural Gas Corp
(ONGC.BO: ), should have the last word in Vedanta Resources’
(VED.L: ) proposed acquisition of Cairn India (CAIL.BO: ), Trade
Minister Anand Sharma said. [ID:nDEL003330]

Cairn Energy (CNE.L: ) fell 2.0 percent after the oil explorer
struck gas in Greenland, which disappointed investors who had
hoped for an oil find, and said the sands were not of a type
that usually yields commercial quantities. [ID:nLDE67N06V]

Elsewhere in the sector, Chilean miner Antofagasta (ANTO.L: )
shed 3.2 percent after it trimmed its annual production target,
even though posting a near doubling in first-half earnings per
share. [ID:nLDE67M1FM]

Global miner Rio Tinto, meanwhile, fell 3.1 percent after a
Canadian newspaper linked it and a Chinese partner with a bid
for Potash Corp (POT.N: ), which is fending off a $39 billion
hostile bid from BHP Billiton. Rio Tinto declined to comment.
[ID:nSYA008290]

Staying with both heavyweight miners, South Africa’s
National Union of Mineworkers said its members at a Rio
Tinto-BHP Billiton (BLT.L: ) joint venture would vote on a strike
on Tuesday over wage demands. BHP Billiton dropped 1.6 percent.

Coal and base metals miner Xstrata (XTA.L: ) also fell
sharply, dropping 3.0 percent after it announced a $381 million
agreed takeover of Australian-listed Sphere Minerals (SPH.AX: ),
which controls magnetite iron ore deposits in Mauritania.
[ID:nSGE67N02N]

Banks were the sharpest fallers with HSBC (HSBA.L: ), which is
in talks with Old Mutual (OML.L: ) over the purchase of a
controlling stake in South Africa’s fourth-largest bank,
Nedbank, down 0.9 percent.

Global mergers and acquisitions have hit nearly $200 billion
so far in August, $77 billion shy of the record set in 1999 for
what is typically one of the quietest months of the year,
Thomson Reuters data showed. [ID:nLDE67J0HZ]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic on M&A data for August, click on http://r.reuters.com/dag36n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
“You have to question why advisors are encouraging firms to
pursue M&A activity at this time … My sense is shareholders
would be better served by money being returned to them,” Charles
Stanley’s Batstone-Carr said.
(Graphics by Scott Barber; Editing by Simon Jessop)

FTSE down as recovery worries overshadow M&A glut