Tonight:
4°c
Shares once again slumped below the 4000 level today, dragged lower by bank shares following cautious comments on the outlook for the sector by a clutch of brokers.
Government-controlled Lloyds Banking Group led the retreat, falling 5.7p to 74p, making it the biggest faller among the top 100 companies. Credit Suisse has dropped its rating on the shares from neutral to underperform with a 45p target. Rival broker Bernstein can only muster a market-perform rating on Lloyds, but has seen fit to raise its sights on the shares from 50p to 75p.
The move by Bernstein was part of a cautious review of the banking sector in general. It expects them to be profitable long-term, but warns it could be a long haul. It has dropped Royal Bank of Scotland, down 2p at 27.8p, from outperform to market-perform although it has tweaked its target 2p higher to 32p. It has also raised Barclays, 9p cheaper at 163.6p, from 160p to 230p with an outperform rating.
Standard Chartered was another casualty, losing 58½p to 901½p, after UBS dropped the shares from neutral to sell with a 780p target because it thinks they are looking overpriced. The shares have risen almost 80% during the past month but UBS reckons it will struggle to grow the bottom line and expects wholesale bad debts to rise. Other financials to come under the hammer included insurers Friends Provident, down 5.1p at 65p, and Legal & General, 3p off at 48p.
Shares generally fell sharply with Morgan Stanley urging clients not to call the bottom of the current bear market. Its views were backed-up by some dreadful industrial production numbers and a warning from the British Chambers of Commerce that unemployment was set to top 3.5 million next year. The FTSE 100 index lost an early lead to stand down 75.83 at 3917.71.
It was business as usual for JJB Sports, trading 1½p firmer at 12½p, despite some speculators having already read the last rites. It has agreed a £25 million short-term facility with Barclays and a £25 million medium-term loan with the Government-controlled Bank of Scotland.
The retailer has also finalised the terms of voluntary arrangements with landlords on payments relating to about 140 closed stores while varying the terms of the leases of a further 250 to permit monthly, rather than quarterly rent payments. But Altium Securities dropped its rating from hold to sell. It confirmed last week that it had sold 58 million shares in JJB, 25% of the company. Spread-betting firm Monecor has since picked up about 32 million shares, or 13%, fuelling talk someone may eventually bid. Rival JD Sports, up 11½p at 370p, which reports tomorrow, continues to hold almost 10% of JJB.
Bernstein has repeated its outperform rating on Kingfisher, 1.5p lighter at 160.6p, and Marks & Spencer, 3¾p cheaper at 306¾p.
Oil explorer Bowleven was the biggest faller on AIM with a drop of 28¾p to 47p after bid talks with an unnamed suitor broke down. The oil and gas explorer with interests in Africa was approached last month with an offer worth 150p a share. This was later slashed to 100p a share, before talks were eventually abandoned. Bowleven says it is now looking at all ways to raise money, including farming out its existing positions in Cameroon and Gabon.
Evolution says it is back to the drawing board for Bowleven. The group has £19.5 million in the bank which is insufficient to drill appraisal wells in Cameroon. Evolution has reduced its rating on the shares and set a 25p target.
Online gambler PartyGaming responded to its first-quarter trading update and the payment of a $105 million (£71 million) fine to avoid prosecution in the US with a rise of 38¼p to 257¼p. That helped lift rival 888 Holdings 9¼p to 99p. Shore Capital says it is keeping PartyGaming at sell, and points to a slowdown in trading.
Car trader Inchcape was showing a fall of 65¾p at 13p after going ex-rights its heavily discounted £234 million rights issue at 6p, and a share consolidation.
