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Shares in British Airways ran into a spot of turbulence this morning, plunging more than 2% which made it the biggest faller among blue chips.
Deutsche Bank has dropped its rating on the shares from buy to hold and set a 12-month target of 175p. They responded to the move with a fall of 4.9p to 204.9. The national carrier faces an uncertain future as it confronts the worst recession on record. Efforts by BA to tackle the slump also appear to be running into trouble with the EU. Its proposed tie-up with Spain's Iberia and American Airlines may be seen as anti-competitive and it could be forced to give up valuable take-off and landing slots in order to appease the European regulatory conditions.
Leading shares generally posted modest gains in thin trading in the wake of last week's GDP showing the UK economy remains firmly in recession. The FTSE 100 index posted a rise of 22.70 at 5265.27.
Citigroup has downgraded its rating on HSBC, down 1.6p at 697p, from buy to hold with a target price of 700p. It says HSBC has an excellent Hong Kong franchise and its performance in this country is “very strong”. But its earning performance has lagged those of its peers and it has seen its previous capital advantage erode.
Standard Chartered's forthcoming trading statement should confirm the international banking group has performed strongly in Asia. But shares trade close to its warranted sum-of-the-parts peer group P/E multiples, hence Citigroup's decision to rate the shares a hold.
Morgan Stanley has some catching-up to do in Standard Chartered, up 5p at 1611½p, and has raised its rating from underweight to equalweight while hiking its target for the shares from 900p to 1500p.
HSBC has given the mining sector the once over after a strong performance of late which has also proved the driving force to haul the rest of the stock market higher. It has begun coverage of Xstrata, 5p dearer at 1018p, with an underweight rating and 900p target and Rio Tinto, up 39p at 3040p, with a neutral rating and 3300 target. BHP Billiton, 14p higher at 1846p, is started at neutral with a 2000p target while Anglo American, 31p better at 2411p, kicks-off with an overweight rating and 2900. In a separate move, Goldman Sachs has raised its sights on Anglo American from 2800p to 2935p.
Shares in Asia began the new working week on a positive note despite Friday's sell-off on Wall Street which saw the Dow Jones drop 109.13 points to 9972.18 and back below the 1000 level.
In Tokyo, leading shares hit their highest closing level in four weeks, supported by exporters such as Honda Motor on a weaker yen. Kawasaki Heavy also jumped on a report of a high-speed rail project in China.
Market players said the weaker yen and optimism for Japan's earnings season, which heads into full swing later this week, helped push the market higher. The Nikkei 225 climbed 79.63 points to 10,362.62, its highest finish since 24 September.
Shionogi gained 65 yen, or 3.2%, to 2,100 yen (£14.04) after the US government issued an emergency use authorisation for a flu drug Shionogi has developed with US drugmaker Biocryst. Shionogi has bought the rights to develop and sell the intravenous drug Peramivir in Japan and Taiwan,
Over in Hong Kong, markets were closed for a local holiday. But South Korea was boosted after its central bank said economic growth accelerated to 2.9% in the third quarter from the previous quarter — the fastest growth since the first quarter of 2002. Asia's fourth-largest economy has been bolstered by government stimulus spending, low interest rates, and a falling won which boosts exports.
