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Tumbling Tate & Lyle, Rolls, drag FTSE down

Tumbling Tate & Lyle, Rolls, drag FTSE down

The FTSE 100’s week-long rally came to a screeching halt on Thursday morning, as both Tate & Lyle and Rolls Royce registered double-digit share price losses.

Ingredients company Tate & Lyle (TATE.L) was faring the worst in a broad blue chip sell-off, with shares down 17% to 649p after warning on 2014 profits, partly because of expectations of lower prices for sucralose, an artificial sweetener.

Tate’s profits will be in line with last year, instead of showing growth, the company said.

While ‘Tate’s core investment thesis around Speciality Food Ingredients (SFI) remains intact this morning,’ according to Jefferies analyst Alex Howson, ‘near term earnings progression [is] likely to be subdued’.

Rolls Royce (RR.L) wasn’t far behind in the FTSE 100 losers’ column, dropping 12% to £10.68, after similarly telling shareholders that 2014 profits would be similar to those in 2013.

Is this a buying opportunity in Rolls? ‘The shares will come under pressure today but improving cash conversion and the formidable order book provide hooks for the longer term,’ commented Ben Bourne of Liberum.

Lloyds Banking Group (LLOY.L) took another hit, too. Shares fell 4.1% to 80p even as the bank reported its first annual pre-tax profit for three years, of £415 million.

A 2.12% gap – or 'net interest margin' (NIM) – between the interest rates Lloyds offers savers and takes from borrowers was better than expected, although this was among figures pre-announced last week.

‘Investment case unaltered, however shares may flat-line ahead of any government placing,’ was the verdict from Mike Trippitt, an analyst at Numis.

Rio Tinto’s (RIO.L) financial update wasn’t well received either. The miner’s shares fell nearly 2% to £34.47 despite announcing a 15% rise in its dividend and reporting a return to profit in 2013.

The good news was ‘modestly offset by slightly lower than expected volume guidance for the major divisions,’ explained analysts at Nomura, who rate Rio a ‘buy’.

Buffeted by the many company financial results, the FTSE 100 fell 0.5% to 6,638.

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