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FTSE falls as Japan data reveal extent of slowdown

FTSE falls as Japan data reveal extent of slowdown

The FTSE 100 fell in early trading as European markets tracked losses in Asia overnight and in the US on Friday.

A sharp drop in Japan’s exports and disappointing corporate results from the US saw the UK’s main stock market index drop 14 points or 0.24% to 5,883.

The data from Japan indicate the world’s third biggest economy may fall back into recession as sales to China and Europe slide and the impact of rebuilding work after last year’s natural disasters declines.

The downbeat news follows General Electric and Macdonald’s reporting lacklustre quarterly sales figures on Friday.

However, the euro gained 0.4% to $1.3038 against the dollar and edged up to 81.31p against the pound after Spain’s prime minister Mariano Rajoy won the backing of his home region of Galicia for his austerity measures. The local election victory could pave the way for him seeking a European bailout.

The Euronext 100 index was barely unchanged at 663.75p.

In London Randgold Resources (RRS.L) led the leader board up 1.7% to £75.40 after SocGen raised its price target to £90 from £76 and rated it ‘buy’.

Aggreko (AGGK.L) fell 1.7% to £21.03 as analysts continue to respond to the temporary power machinery’s profits warning on Friday. Barclays (BARC.L) cut its price target to £23.60 from £25.50 rating it ‘overweight’ and Espirto Santo investment bank cut its fair value to £25.50 from £27 per share.

BP (BP.L) fell 4.65p or 1% to 445.75p after over nervousness at the impact of any deal with Rosneft, the state controlled Russian energy firm. BP said it remained in advanced discussions with Rosneft over swapping its 50% stake in its TNK joint venture into what has been reported as a holding of between 16% and 20% in Rosneft. Oriel Securities cautioned that BP's partners in TNK may seek to sell their stake in the joint venture to Rosneft first.

Lloyds (LLOY.L) firmed 0.25p to 40.75p on reports that it was considering ditching annual bonuses for senior staff and replacing them with longer-term incentive schemes.

BHP Billiton (BLT.L) fell 20.5p or 1% to £20.13 as economic fears outweighed news that coal miners in Australia had voted to accept an employment contract offer after two years of industrial action.

Among mid-cap stocks Devro (DVO.L) fell 9% or 31p to 305p after the sausage-skin maker, a long-term favourite of Derek Stuart’s Artemis Special Situations fund, warned that it expected full-year operating profits to be slightly below its earlier expectations, although they would be ahead of last year. The company has been hit by currency movements, rising raw material costs and extending plant commissioning periods.

Abcam (ABCA.L) shed 6.25p or 1.6% to 385.75p after the biotech company said it expected to deliver continued growth.

Senior (SNR.L) gained 4.6p or 2.3% to 201p as investors expressed their relief at the aerospace engineer saying it expected 2012 adjusted pre-tax profits to be in line with previous expectations.

Telford Homes (TELF.L)  advanced 9.2p or 6.8% to 143.7p after the housebuilder reported strong sales in the six months to the end of September and forecast higher profits.

Fidessa (FDSA.L) tumbled 49p or 3.5% to £13.23 as the trading software company used a third quarter statement to warn that 2012 revenues would be flat on last year with lower margins. Andrew Darley of Finncap cut his target price but retained his 'hold' stance, writing, 'The valuation parameter for the business should remain strong, with 80%+ recurring revenue, and strog cash generation; however, the reduction in forecasts clearly affects the target price, and we see no silver lining yet. At 17s December 2012 the stock is worth £13.40 (formerly £15).'

Circle Oil (COPU.L) slid 0.5p or 23.3% to 19.7p despite saying it expected positive well results from Egypt. 

Interior Services (ISG.L) added 1.2p or 0.8% to 147.2p as the small support services group said it had won £100 million worth of contracts.

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Derek Stuart
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100/151 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 11.91%
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