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Stock-market investors chose to pause for breath today and take profits in the wake of last week's strong run, which carried leading share prices above the 4700 mark to their highest level since October last year.
Bullish news on the US economy has bolstered investor confidence and raised hopes that the upturn may be in sight. So they were happy to rest on their laurels with few leads anticipated from New York this afternoon when trading resumes.
The FTSE 100 index briefly dipped back below 4700 before paring back its deficit to 16.2 at 4715.3 but traders remained alert. In these volatile markets sentiment can turn on a sixpence. This afternoon on Wall Street shares also came in for profit taking with the Dow Jones losing 27.8 at 9342.2.
Shares of British Airways made a low approach over the Square Mile, dipping 3.7p to 167.4p despite news of stakebuilding by BlackRock Investment Management. The giant US fund manager has in recent weeks built up its stake from below the undisclosed 3% level to 5%, equivalent to 57.7 million shares.
At the end of July, BA shares were trading around the 130p level, undermined by deteriorating trading conditions and a growing pension deficit.
The miners, which have provided a key driving force to the market, were in retreat along with the price of raw materials.
Rio Tinto, which has come under increased pressure from the Chinese who have accused it of spying and costing its economy somewhere in the region of $100 billion, fell 75½p to 2346p. The Chinese allege Rio has spied on six of its steel mills for years, resulting in them overpaying for iron ore.
There were also losses for Anglo American, down 50p at 1888p, and BHP Billiton, 41p at 1548p. Vedanta lost an early lead to trade 22p lower at 1803p despite Deutsche Bank moving the shares from hold to buy.
Life assurer Friends Provident stood out with a rise of 5p at 75.3p after it emerged at the weekend that it had agreed to re-open bid talks with rival Resolution, ¼p better at 89p. It came after Resolution presented FP with improved terms of 0.9 new Resolution shares for every FP share, valuing the terms at just a tad over 80p each. The new terms also include a £500 million cash alternative. Panmure Gordon has raised its rating on FP from hold to buy.
Aviva was a nervous market in the wake of last week's interim results, which saw it cut its payout to shareholders. The shares lost 0.9p at 380.8p. Deutsche Bank rates the shares a buy and has jacked up its target from 401p to 460p, while Morgan Stanley has an equal weight rating but has raised its target from 323p to 446p.
By contrast, Prudential added 14.6p at 487.2p. The UK's largest life assurer reports on Thursday and is expected to buck the trend by raising its half-year dividend.
Elsewhere in the financial sector Lloyds Banking Group dropped back below the quid level with a fall of 4.2p to 97.7p after weekend reports that chief executive Eric Daniels wants to ask shareholders to stump up billions of pounds more in order to avoid joining the Government's Asset Protection Scheme.
The ASP is likely to cost Lloyds an estimated £15.6 billion in order to insure £260 billion worth of toxic loans. Shareholders were asked to cough up £4 billion earlier this year and a similar amount in June last year. In addition, the Government has chucked a further £12 billion at it.
Royal Bank of Scotland was another weak market in the wake of Friday's results, losing 2.3p at 44.6p as more than 130 million shares changed hands despite Exane raising its target from 30p to 35p. Barclays traded 4.8p lower at 360.2p.
Further evidence that the housing market may have finally hit rock bottom was provided by Bank of America Merrill Lynch, which has upped its target price for builders' merchant Travis Perkins from 600p to 840p with a neutral rating. That compares with the current share price of 820½p, up 21p. Travis Perkins struck a low of 229½p in February.
Citigroup has raised its rating on Logica from sell to hold following Friday's results, based on its ability to control costs.
Deutsche Bank is rating the shares a buy with its target lifted from 135p to 143p. The shares firmed 2.2p to 113.9p although others were not so sure about the outlook for the computer maintenance specialist.
