FTSE flat as weak Japan data counters firm miners

By Tricia Wright

LONDON (BestGrowthStock) – Britain’s top shares closed flat Monday as concerns over economic recovery after weak data from Japan offset firmer miners, led up by Vedanta Resources

which made its play for a controlling stake in Cairn India.

The FTSE 100 ended up 0.66 points at 5,276.10, having closed up 0.2 percent Friday.

“Investors continue to be spooked by the poor macroeconomic environment. That was reinforced by the disappointing growth numbers from Japan earlier today which set a bit of a negative tone,” said Henk Potts, equity strategist at Barclays Wealth.

“In saying that, companies continue to exceed their earnings estimates in terms of the reporting season and merger and acquisition activity continues to be a very supportive theme for equity markets,” he said.

In the latest sign the recovery may lag expectations, Japan’s economy grew just 0.1 percent in the second quarter, below forecasts.

And in the United States, homebuilder sentiment unexpectedly fell for a third straight month in August to its lowest level since March 2009, according to an industry survey.

Integrated oil stocks took the most points off the UK blue-chip index, with BP the worst off, down 1.6 percent, with traders pointing to mounting worries about the legal threat facing the oil giant after Alabama said it is suing for “catastrophic harm” caused by the Gulf of Mexico oil spill.

Royal Dutch Shell and BG Group dipped 0.3 percent and 0.2 percent respectively, as the price of crude slipped.

Elsewhere, British insurer Aviva, down 2.5 percent, failed to see off bid speculation despite rejecting a 5 billion pound ($7.81 billion) offer from rival RSA Insurance Group that analysts and shareholders said might add up.

RSA fell 2.3 percent.

Miners were in demand. Vedanta Resources will spend up to $9.6 billion acquiring as much as 60 percent of Cairn India, branching out into oil and gas and delivering a cash windfall to its current owners. Vedanta rose 4.9 percent.

Edinburgh-based Cairn Energy, which holds 62.4 percent of Cairn India, added 5.3 percent.

Miners also received a boost as Credit Suisse said in a note that it saw stronger future demand from China, which it believes “is on the cusp of a rebound after nearly a year of sharp slowing.”

Xstrata, one of Credit Suisse’s favored mining large cap plays, climbed 1.9 percent.

“U.S. earnings data will be focusing on the retailers this week, while tomorrow’s UK inflation data, eurozone ZEW survey and U.S. PPI readings will all add a bit more color back into the market,” Yusuf Heusen, senior sales trade at IG Index said.

“However there is no escaping the fact that we’re bang in the middle of August and with half the City on holiday, it could still end up being a somewhat lethargic week ahead,” he said.

(Editing by David Cowell)

FTSE flat as weak Japan data counters firm miners