Afternoon:
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Shares on both sides of the Atlantic fell sharply this afternoon, dropping back through their respective support levels.
In London, a mixture of profit-taking and caution ahead of Wednesday's crucial Budget left the FTSE 100 index nursing a loss of 111.44 points at 3981.36. Second-liners also came under the hammer, having strongly outperformed blue-chips of late. The FTSE 250 index tumbled 266.17 points to 7041.56. On Wall Street this afternoon, traders had second thoughts about first-quarter results from Bank of America.
UK banks tried to extend their recent strong run but quickly came off the boil after seeing the big write-offs at BoA. Lloyds Banking Group touched 109p before slamming into reverse with a fall of 6.1p at 98.5p while Royal Bank of Scotland slipped 0.9p at 31.8p after reaching 34.1p. HSBC fell 30¾p to 454¼p despite UBS raising its target for the shares from 450p to 530p.
But any benefit from the banks was countered by a sell-off among the miners. Citigroup has been arguing for an improved performance among them.
“But with the sector now having recovered 46% of the relative performance versus the FTSE that it lost in the downturn, it is likely due for a pause now”, warns the broker. Xstrata shed 72½p to 517½p, Kazakhmys 51p to 463½p and Eurasian Natural Resources 64p to 515p. The notable exception was Randgold Resources, up 198p at 3021p in a thin market, which took advantage of claims that the price of the precious metal will soon top $1000 an ounce.
Bankers representing Wolseley, the world's biggest plumbing-equipment supplier, were today getting ready to place the rump of its recent billion-pound rights issue and placing.
Wolseley, which last month saw its shares slump to an 18-year low, raised £270 million through a placing of 225 million new shares at a heavily discounted 120p. After a share consolidation, it raised a further £781 million by way of an 11-for-five rights issue at the equivalent of 40p. Today the nil-paid went fully paid, with the price responding with a jump of 14p at 1199p.
At the same time, UBS has raised its rating from neutral to buy because it reckons the shares are starting to look cheap, and has lifted its share price target from 604p to 1479p.
Wolseley's placing and rights issue, and its decision to sell or close stock, are viewed as a comprehensive financial package that strengthens the balance sheet and provides it with flexibility to restructure and prepare for recovery.
Investec has raised Halfords, down 4p at 310½p, from hold to buy and raised its target from 275p to 365p following last week's full-year results.
Logica, 5½p cheaper at 71¾p, has made the most of the recent rally among cyclical stocks, which has seen it rise by around 20% during the past six trading sessions. But Numis Securities has dropped its rating from hold to sell.
