FTSE off 4-month closing high on Barclays, miners

By Dominic Lau

LONDON (BestGrowthStock) – Britain’s top share index fell from a four-month closing high and ended a seven-session winning run on Tuesday, led lower by Barclays (BARC.L: ) after management changes and miners on concerns over Australia’s tax plan.

In positive news, Invensys (ISYS.L: ) climbed 7.4 percent, with traders citing a newspaper report that the engineering group is a takeover target. An Invensys spokesman declined to comment.

The FTSE 100 (.FTSE: ) closed 31.37 points or 0.6 percent lower at 5,407.82, after gaining 6.5 percent in the previous seven sessions, and volumes were 63 percent of its 90-day daily average.

“The market will be very range-bound between the 5,000 and 5,500 level. It’s difficult to see what will be the catalyst to enable it to break through the ceiling at 5,500,” said Tim Whitehead, head of portfolio service at Redmayne-Bentley.

“There is definitive support of the market at 4,800 on yield ground, especially with government bond yields yielding so little.”

The UK benchmark offered a dividend yield of 3.37 percent, Thomson Reuters Datastream showed, versus the 2.92-percent from benchmark 10-year British gilts.

Barclays (BARC.L: ) dropped 2.7 percent after it said it had appointed Bob Diamond, the head of its investment and wealth management business, as its new group chief executive.

The appointment raised the issue of whether the lender might become more of an investment bank, a trader said.

The banking sector (.FTNMX8350: ), down 0.7 percent, was also hurt by renewed fears over capital reform from the Basel committee and after Wall Street Journal said the recent European bank stress tests understated some lenders’ holdings of potentially risky government debt.

Guy de Blonay, fund manager at Jupiter Asset Management, remains cautious on European banking stocks.

“Instead, we seek exposure to emerging growth with stocks like HSBC (HSBA.L: ) … which is in a good position for strategic acquisitions due to its excess of capital, and Standard Chartered (STAN.L: ), which gets 90 percent of its revenues from emerging markets,” he said.

HSBC was flat and StanChart eased 0.3 percent.

UK banks carried a 12-month forward price-to-earnings of 10.54 times, versus the STOXX Europe 600 banking index’s (.SX7P: ) 8.38 and the FTSE 100’s 9.55, Datastream showed.


Mining shares (.FTNMX1770: ) were among other top losing sector, off 1.4 percent, with traders saying a 30 percent tax on miners is likely to go ahead in Australia with Prime Minister Julia Gillard retaining power and backed by independent and Green MPs.

BHP Billiton (BLT.L: ) fell 1.4 percent. Sources said China’s state-owned chemicals group Sinochem Corp has approached Singapore state investor Temasek to join a consortium that could counter BHP’s $39 billion bid for Potash Corp (POT.TO: ) (POT.N: ).

Cable & Wireless Worldwide (CWP.L: ), which gained more than 10 percent last week, shed 3.6 percent as hopes it might be the subject of a bid from Singapore Telecommunications (STEL.SI: ) were deflated by a Citigroup note, which said the Singapore company wanted to focus on the Asia-Pacific region.

Tullow Oil (TLW.L: ) rose 3.9 percent, extending the previous session’s gains, with traders citing speculation in the press on bid talk from ExxonMobil (XOM.N: ) and China Offshore Oil Corp.

(Additional reporting by Blaise Robinson in Paris)

FTSE off 4-month closing high on Barclays, miners