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FTSE wobbles as RSA Insurance falls on downgrade
RSA Insurance is the FTSE 100's biggest loser as Panmure Gordon downgrades the stock on earnings and dividend growth concerns.
Britain’s FTSE 100 wobbled on Wednesday morning as Spain slid into recession, reigniting eurozone fears, and after RSA Insurance shares lost value following a downgrade.
The benchmark UK index of blue-chip shares added 0.11%, or eight points, to 5,875 and the Mid-250 index took on 0.4%, or five points, to 11,716. See the FTSE’s performance.
RSA Insurance hit
RSA Insurance Group (RSA.L) fell 5.5p, or 4.8%, to 110.3p as dividends of 5.8p were paid out and analysts at Panmure Gordon downgraded the stock from ‘hold’ to ‘sell’ and reduced their target price from 110p to 99p.
The group’s management had a shake-up last year when Andy Haste stepped down as chief executive after eight years in the role, during which time he reversed the group’s fortunes.
Barrie Cornes, analyst at Pamure, cited lower earnings and falling dividend growth as concerns for investors.
He said: ‘The recent 2011 results were solid, but they flagged a slowdown in dividend growth, investment income and greater than anticipated Solvency II implementation cost.
‘We have consequently cut our full-year 2012/13 earnings by 23% and 16% respectively along with the rate of dividend growth from 6% to 2.5%.'
Concerns about Spain and Italy
European stock markets also traded with caution as official figures showed that Spain has lapsed back into recession.
Michael Hewson, senior market analyst at CMC Markets, said: ‘After the Bernanke-induced gains of the early part of the week European markets look set to open lower this morning as a sense of proportion returns to the markets, and concerns about Spain and Italy’s fiscal outlook return.
‘Concerns about Spain continue to dominate after data showed that the economy was slipping back into recession in 2012, while the government remained committed to slashing spending across the board in an attempt to meet Brussels targets of a deficit of 2012 of 5.3% of GDP.’
European stock markets made small gains: Germany’s DAX index added 0.13% to 7,088, France's CAC 40 index ticked up 0.18% to 3,476, and the FTSEurofirst 300 index of top European shares took on 0.14% to 1,085.
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