FTSE flat on euro debt jitters; Vodafone rises

By David Brett

LONDON (BestGrowthStock) – Britain’s top shares ended flat on Monday as jitters over Europe’s debt eroded early gains, with miners weak on demand concerns and travel firms hit by the Icelandic ash cloud.

The FTSE 100 (.FTSE: ) closed down 0.3 points at 5,262.54 after it fell 3.1 percent on Friday, punished by anxiety over the euro zone debt crisis.

London’s blue chips had advanced to 5,327.46 earlier on Monday before retreating as the specter of Europe’s debt again loomed over the market.

“It’s a general market phenomenon to do with the state of confidence about the Europe package,” said Brian Hilliard, UK economist at Societe Generale.

Miners tracked steep declines in metal prices, which fell 4.0-7.0 percent as investors bought into the safe havens of the dollar and gold.

Rio Tinto (RIO.L: ), Fresnillo (FRES.L: ), Kazakhmys (KAZ.L: ), Xstrata (XTA.L: ) and Antofagasta (ANTO.L: ) dropped 1.4-2.8 percent.

Barclays (BARC.L: ), Lloyds Banking Group (LLOY.L: ) and Royal Bank of Scotland (RBS.L: ) fell 0.7-1.4 percent as JPMorgan said it sees the three UK banks being impacted most from potential changes to provisioning requirements.

But Asia-focused Standard Chartered (STAN.L: ) was the top FTSE gainer, up 4.3 percent, helped by its majority owned Kenya unit lifting profits more than a third in the first quarter.

Britain’s new coalition government will launch steps to chip away at the UK’s fiscal deficit next Monday when it outlines 6 billion pounds ($8.75 billion) of spending cuts this year ahead of its first budget on June 22.

“The key issue is whether the market believes that the government can tackle the fiscal deficit and do it persistently without destroying growth,” Hilliard said.

The blue-chip index is down 2.8 percent for the year. It had strong gains in February and March but has lost 4.4 percent so far this month.

Sentiment also took a knock as a manufacturing measure in New York State continued to grow in May but at a slower pace.

TRAVEL TURMOIL

The volcanic ash from Iceland caused further travel chaos, grounding 1,000 flights and delaying hundreds of thousands of passengers in parts of northern Europe on Monday.

TUI Travel (TT.L: ) and Thomas Cook (TCG.L: ), which has estimated profit would be hit by around 70 million pounds as a result of the chaos, shed 2.9 and 3.2 percent respectively.

British Airways (BAY.L: ) fell 1.2 percent as the airline said last-ditch talks to halt a strike by cabin crew on Tuesday were unlikely to succeed.

Among financials, Prudential (PRU.L: ) fell 1.5 percent after it finally launched a much-delayed $21 billion rights issue.

Hedge fund manager Man Group (EMG.L: ) was the top faller, down 8.9 percent after it said it had agreed to buy rival GLG Partners as investors fretted about the value of the deal.

On the upside, index heavyweight Vodafone (VOD.L: ) rose 1.4 percent after Vodacom (VODJ.J: ), its majority owned South African business, said it will raise its dividend and reported increased earnings — taken as a positive sign ahead of results from the UK company on Tuesday.

Stock Research

(Editing by David Cowell)

FTSE flat on euro debt jitters; Vodafone rises