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FTSE edges lower as Ukraine elections weigh

FTSE edges lower as Ukraine elections weigh

The FTSE 100 edged lower amid a lack of conviction among traders amid geopolitical uncertainty in the run-up to long weekends in the US and UK.

Ukrainian elections to be held on Sunday are weighing on investors' minds. Ukraine said more than a dozen servicemen were killed yesterday morning in a clash with pro-Russian separatists, adding to tensions ahead of the poll.

The UK blue-chip index shed 15 points, or 0.2%, to 6,806 with engineering company Smiths Group (SMIN) the biggest faller, dropping 21p, or 1.6%, to £12.94 as investors digested a disappointing set of results.

As Smiths reported mixed fortunes for the nine months to 3 May, investors focused on its detection business, which manufactures sensors that identify explosives and weapons. Smiths has cut its profit guidance for the division.

'The full year outlook for headline operating profit is in line with expectations for all businesses... except Smiths Distribution where profitability is now expected to be £25 million lower,' the group said in its trading statement.

'This trading statement is affirming our conclusion that Smiths is a difficult business to manage,' said Matthew Spurr, analyst at Espirito Santo Investment Bank. 'Bulls can try to latch on to new detection management as pointer to a recovery that can take place further down the road, but it is clear that this division has become a lumpier and harder to forecast business than some elements of the market are prepared to accept.

There was more activity on the FTSE 250, where rail and bus company Go-Ahead Group (GOG) surged by 8.6%, adding 166p to reach £21.04, after winning the Thameslink, Southern and Great Northern rail franchise from FirstGroup. FirstGroup (FGP) shares fell 4p, or 3%, to 130.8p, on the news.

'This is a major coup for Go-Ahead as, not only does it give the group certainty over its rail earnings for a number of years (and is a major shareholder value enhancing contract), but it brings forward the day when we might expect a dividend-per-share increase,' said John Lawson, analyst at Investec.

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