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FTSE hit by wave of weak company news
by Chris Marshall on Oct 08, 2012 at 09:14
Investors had both weak corporate reports and downbeat economic news to contend with on Monday morning, leaving the trading screens filled with red in response.
London shares opened lower, with some medium-sized companies particularly suffering. Cookson (CKSN.L) was faring the worst, with shares down nearly 15% to 525p after the industrial materials group warned that its full-year performance would likely be ‘materially below’ management’s previous expectations.
Weakness in Cookson’s engineered ceramics division was behind the bad news, hit hard by the downturn in the global steel industry, where economic weakness has hit production.
Cookson said it was attempting to cut costs in this division, and ‘more substantial restructuring and cost reduction measures will be implemented as necessary’.
'Disappointing' recruitment result
Michael Page (MPI.L) also served up a profit warning to investors, reporting a challenging third quarter across all regions, with the Olympics reducing activity in the UK and the continuing economic uncertainty weighing on Europe, Middle East and Africa (EMEA), the recruiter’s biggest geographical market.
The group reported an 11% drop in third-quarter profits, while chief executive Steve Ingham also warned of more tough times to come: 'In most regions activity levels improved towards the end of Q3, however, we do anticipate another challenging fourth quarter, with economic conditions and market confidence likely to remain poor for the foreseeable future.'
David O’Brien, analyst at Shore, said he was reviewing his ‘buy’ recommendation on the shares: ‘Relative to others in the sector who have reported on Q3 results to date, this is the most disappointing outcome.’
Michael Page shares dropped by 4.2% to 349p.
More platinum woes
Aquarius Platinum (AQP.L) was also lower on the FTSE 250 after chief executive Stuart Murray – who was also chairman of the group’s principal subsidiary, Aquarius Platinum South Africa – resigned. Shares dropped by 7.3% to 44p.
Miners lead FTSE lower amid economic fears
The miners’ losses reflected renewed gloom about the strength of the global economy after the World Bank released a report predicting that weak exports and lower investment growth will cut down China’s GDP growth from 9.3% in 2011 to 7.7% this year. While the eurozone crisis had eased, ‘considerable downside risks remain’ the report warned.
European finance ministers are due to meet today, adding to nerves as markets continue to await news of Spain’s plans to request aid.
There was however some positive economic news this morning, with September's headline HSBC China services PMI rising to a four-month high of 54.3, compared with 52 in August.
Nonetheless, markets around the world were lower, with European indices following losses across most of Asia. The FTSE 100 dropped by 0.8% to 5,824, while the eurofirst 300 was 1% lower.
Lloyds divi threat
Shares in Lloyds Banking Group (LLOY.L) fell 1.3% to 37.3p after the Sunday Times reported that the bank was involved in a dispute with the Financial Services Authority over its plans to resume dividend payments. But Lloyds shares were faring no worse than other UK banks, which were also lower.
BAE merger warning
Shares in BAE Systems (BAES.L) were down 1% to 324p, performing just slightly worse than the broader market after the company’s biggest shareholder, Invesco, stated it had ‘significant reservations’ about the proposed merger of EADS and BAE Systems.
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- Lloyds Banking Group PLC (LLOY.L)
- Vedanta Resources PLC (VED.L)
- Fresnillo PLC (FRES.L)
- EVRAZ plc (EVRE.L)
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- Michael Page International PLC (MPI.L)
- Aquarius Platinum Ltd (AQP.L)
- BAE Systems PLC (BAES.L)
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