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FTSE grounded as Standard Chartered disappoints

by Chris Marshall on Dec 04, 2013 at 09:46

FTSE grounded as Standard Chartered disappoints

Britain’s FTSE 100 failed to bounce back after three consecutive days of losses, with a poorly received financial update from Standard Chartered keeping the index grounded.

Mixed corporate results, angst ahead of major economic updates – particularly Friday’s US jobs data – and a clutch of shares trading ex-dividend all constrained the index, which was flat at 6,537, failing to bounce back from Tuesday’s 1% decline. European shares were on aggregate also flat.

Standard Chartered (STAN.L) was the biggest faller on the FTSE 100, down nearly 6% at £13.47, after the bank told investors to expect a continuation of the tough trading conditions that have held its shares back since March.

The emerging markets focused bank reported that tough conditions in South Korea in particular meant that full-year total income would probably be flat compared with the previous year.

Investors have been betting on a turnaround for the bank. Edward Legget, manager of the Standard Life Investments UK Equity Unconstrained Fund , has moved money out of Lloyds (LLOY.L) and into Standard Chartered, he told investors this week.

'It is the UK’s cheapest bank which, in our view, remains an anomaly,' commented Investec analyst Ian Gordon this morning, adding that the outlook for Standard Chartered remains 'robust'.

Tesco (TSCO.L) managed a small gain, rising 0.4% to 342p despite reporting declining third quarter sales in its key UK market, in another weak update.

The update heaps more pressure on the chain that is losing market share and attempting a turnaround strategy.

‘Tesco has not managed to break the constraint of subdued revenue growth,’ commented Shore Capital analyst Clive Black. ‘That said, we are relieved that full-year expectations as guided by the company remain intact,’ added the analyst, explaining the company's small share price rise.

Sage (SGE.L), the software group, leapt 9.2% higher to 379p as investors welcomed a 6% dividend hike and ‘a workmanlike set of results which hit estimates,’ as George O’Connor of Panmure put it.

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