Having started the day with hopes of rising back above 6,000, the top share index hurtled in the opposite direction to fall below 5,900 after debt ratings firm Standard & Poor’s (S&P) put the cat among the pigeons by downgrading the outlook for US sovereign debt.
Though S&P affirmed the USA´s ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings, it revised its outlook on the long-term rating of the US sovereign debt to negative from stable.
In common with the rest of the stock markets in the west, London headed south at a rate of knots, and just two stocks in the FTSE 100 – WPP and Serco – ended the day in positive territory, while Reckitt Benckiser finished unchanged.
Miners took a bashing from the news, with Antofagasta, Anglo American andFresnillo the worst affected.
Insurer Resolution was a heavy faller, though its decline was due to UBS downgrading the stock from “buy” to “neutral”.
Bid hopes for medical devices maker Smith & Nephew (S&N) took a knock after reports emerged that massive US healthcare conglomerate is taking a look at Swiss company Synthes, one of S&N’s rivals.
Upstream exploration and production company Heritage Oil has been slapped with a $313.45m lawsuit by Tullow Oil related to the sale of Heritage's 50% interest in Blocks 1 and 3A in Uganda.
Tullow is claiming that Heritage should foot the tax bill that Tullow has paid relating to the sale of Heritage's Ugandan interests to Tullow, while Heritage is claiming that Tullow had no right to pay the Ugandan's tax demand on Heritage's behalf, and questions whether the tax liability is legal in any case.
Elsewhere in the oil sector, highly volatile stock Desire Petroleum loses more than half its value after it said the 14/15-3 well on the Ninky prospect in the North Falkland basis is to be plugged and abandoned.
Fellow Falklands operator Rockhopper, which has a 7.5% stake in the well, took some collateral damage.
Engineering software firm Aveva said it expects full year results to be in line with expectations after a good performance in Asia Pacific Oil and Gas and Power sectors. "The group has continued to perform well in its key vertical markets and geographies, consistent with the trends identified in January 2011," the group said in company update.
RBS was encouraged by what it saw as a reassuring trading update. “This supports our view that AVEVA is and will continue to be one of the fastest growing stocks in the sector. We maintain our Buy recommendation,” the broker said.
RBS also had some good words for terrestrial broadcaster ITV, the best performing blue-chip of the morning session.
“Media buyers suggest ITV's advertising is proving resilient (2Q expected to be flat) despite profit warnings in the retail sector, as retailers continue to battle for share of voice. We see a buying opportunity ahead of expected improved trading in 3Q when the yoy [yer on year] comparatives ease and the Rugby World Cup will help,” RBS claims.
Irish mining firm Kenmare Resources said its Moma titanium minerals mine is producing broadly in line with expectations, while plans to increase total production by 50% in 2012 are on schedule. The company said revenue picked up in 2010 to $91.6m from $26.7m in 2009, while losses before tax narrowed to $16.33m from $30.35m, as prices for the company's products recovered rapidly during the course of the year.
While the blue-chips were getting a hammering, things weren’t quite so bad among FTSE 250 stocks, where online gaming firm Bwin.party was a hot favourite, after the US authorities cracked down on the four largest poker web sites in the US, charging them with money laundering, bank fraud and various other offences.
Jupiter Fund Management saw assets under management rise 1.57% in the first quarter of 2011, primarily as a result of new funds flowing in. Assets under management rose to £34,453m at the end of March from £24,078m at the end of 2010. Of the £375m gain, £333m was due to net inflows and £42m to market movements.
Banking software firm Gresham Computing reported improved first quarter pre-tax profit and revenue while it remains confident about its recently upgraded outlook. For the quarter ended 17 April 2011 pre-tax profit rose to £0.3m from £0.0m the year before. Revenue for the period rose to £2.5m from £1.9m. Adjusted EBITDA profit increased to £0.4m from £0.1m the same quarter a year earlier.
Avanti Communications was flying high on after a New York court upheld its claim for a $7.57m refund from Space Exploration Technologies Corporation.
After numerous profit warnings over the last month, the chairman of marketing software provider Alterian has reassured investors over its near-term recovery, saying “we are going to sort it out.”
"In spite of this serious setback, I still believe that the company has good and competitive products addressing good markets and many very able people,” said chairman Keith Hamill, in a statement that cheered the market.
FTSE 100 - Risers
WPP (WPP) 722.00p +0.14%
Serco Group (SRP) 555.50p +0.09%
Reckitt Benckiser Group (RB.) 3,200.00p 0.00%
FTSE 100 - Fallers
Antofagasta (ANTO) 1,304.00p -4.96%
Anglo American (AAL) 2,983.00p -4.95%
Resolution Ltd. (RSL) 294.70p -4.75%
Aviva (AV.) 414.70p -4.64%
Man Group (EMG) 239.70p -4.35%
Investec (INVP) 455.80p -4.16%
Fresnillo (FRES) 1,514.00p -3.87%
Kazakhmys (KAZ) 1,308.00p -3.75%
Prudential (PRU) 715.50p -3.70%
Barclays (BARC) 290.70p -3.63%
FTSE 250 - Risers
Bwin.party Digital Entertainment (BPTY) 170.00p +29.77%
Micro Focus International Plc (MCRO) 306.80p +5.14%
Yule Catto & Co (YULC) 199.70p +3.90%
Domino Printing Sciences (DNO) 609.00p +2.18%
JD Sports Fashion (JD.) 869.00p +2.06%
RPS Group (RPS) 209.30p +2.00%
Home Retail Group (HOME) 216.20p +1.74%
Anglo Pacific Group (APF) 321.50p +1.55%
Cranswick (CWK) 760.00p +1.47%
Enterprise Inns (ETI) 90.50p +0.89%
FTSE 250 - Fallers
Kofax (KFX) 476.70p -7.44%
Heritage Oil (HOIL) 251.60p -6.81%
Betfair Group (BET) 895.00p -5.54%
Centamin Egypt Ltd. (CEY) 144.40p -5.12%
Afren (AFR) 151.20p -4.42%
Bodycote (BOY) 310.70p -4.40%
Aquarius Platinum Ltd. (AQP) 330.00p -4.24%
Gem Diamonds Ltd. (DI) (GEMD) 262.00p -4.20%
Chemring Group (CHG) 668.50p -4.16%
easyJet (EZJ) 326.10p -4.03%
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