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Warnings hit Cobham and Cape as FTSE edges lower

Warnings hit Cobham and Cape as FTSE edges lower

(Update) The FTSE 100 made a cautious start to the week slipping two points to 5,767 as worries about the US, Europe and Japan offset positive news from China.

In the US trading was thin as a result of Veterans Day with the S&P 500 index also shedding two points to 1,378. In Europe the Euronext 100 dipped a point to 650.75.

The latest numbers out of China showed export growth hitting a five-month high, adding to hopes that the country's slowdown may be coming to an end.

However, anxiety was heightened by news that Japan's economy shrank by 0.9% in the third quarter.

In the eurozone attention was fixed on Greece where the parliament passed the latest austerity budget but the troika continued to haggle over the terms of the next tranche of aid for the stricken economy. Shares in Greek banks plunged after the government released the details of its recapitalisation scheme.

The pound continued to fall against the dollar, down 0.16% to $1.5866 in response to the suprise move of the Bank of England to transfer £35 billion of surplus cash from its QE scheme to the Treasury. Ther was also nervousness ahead of the Bank's quarterly Inlfation Report on Wednesday.

Gold reversed its gains from earlier in the day trading 0.3% down at $1,725 an ounce.

Admiral jumps on upgrade

Admiral (ADML.L) led the FTSE 100, advancing 3.6% or 38p to £10.88 after analysts at Bank of America Merrill Lynch upgraded the car insurer to 'buy' from 'underperform'. They highlighted the stock's high yield of over 9% and said the shares had fallen too far since its third quarter results earlier this month (see chart). The results showed weakening car insurance rates.

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Cobham hit by US defence cuts

Shares in Cobham (COB.L) dropped nearly 10% or 20p to 190.6p after the aero electronics group warned cuts in US military spending would hit its revenues next year.

The £2 billion company, which is held by the M&G Recovery fund run by Tom Dobell, said it expected revenues to fall by ‘low-to-mid single digits’ in 2013.

In a statement to the stock exchange it said: ‘The US defence and security market remains challenging with the market continuing through the down cycle, driven by the overall fiscal pressure the US faces but with a lack of political consensus on US government budgets.’

Cobham's equipment helps communication between military aircraft and vehicles. It said it would extend its restructuring programme for another two years at a cost of £60 million.

Cape finance director leaves after latest warning

Cape (CIU.L) slumped 27% or 70p to 191.5p after the industrial services provider issued the latest in a series of profits warnings and announced the departure of its finance director, Richard Bingham.

Cape, which provides services to plant operators in the energy and mining sectors, said full-year operating profits would be significantly below expectations.

It revealed that a review of its troubled Australian business had raised questions over the valuation of ‘certain balance sheet items’.

Builders bottom out

House builder shares traded steadily as three companies reported challenging but stable conditions with the housing market showing signs of recovery and supply of mortgages easing slightly.

Bovis Homes (BVS.L) lost its early gains to close nine points or 1.75% down at 506.5p after saying it was on track to deliver a strong increase in revenues for this year.

Taylor Wimpey (TW.L) dipped slightly to 58.6p after expressing confidence that it would meet investors’ full-year expectations.

Redrow (RDW.L), which faced an investor revolt at its annual general meeting this morning over the handling of an attempted takeover by founder Steve Morgan, closed two points lower at 156.6p as it reported a small increase in sales.

Elsewhere Dignity (DTY.L) advanced 12p or 1.3% to 935p after the undertakers group said underlying operating profits had risen to £53.4 million from £48.4 million in the third quarter and expressed its confidence for 2013.

Interserve (IRV.L) jumped 8p or 2% to 375p as the support services group reported it had won more than £500 million of new work in the third quarer.

Aveva (AVV.L) recovered its early losses to close nearly 4p up at £20.04 after the engineering software provider reported 10% increase in first half profits to £28.7 million on revenues 15% up at £97.6 million.

Explorer Heritage Oil (HOIL.L) shed 3.4p to 197.6p as it confirmed plans to sell its remaining stake in a gas field in Kurdistan to its partner Genel Energy, which is run by former BP boss Tony Hayward.  It will now focus on its operations in Africa.

Wincanton (WIN.L) closed unchanged at 75p on news that finance director Jon Kempster is leaving the logistics group.

Click on our FTSE home page to see the rest of today's risers and fallers

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Tom Dobell
Tom Dobell
105/155 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 17.09%
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