FTSE 100 close: Equities calm after storming April
The FTSE 100 index searched for direction today as investors pause for breath after the market's best month for six years.
New month: Shares made a cautious start to May after considerable gains in April
Optimism that the world economy could be near a turning point saw the Footsie climb 8.1% in April, amid improving confidence in banks and a greater risk appetite in markets.
But the blue-chip index made a cautious start to May, closing 0.5 points down at 4243.2.
This reflected a slow day across world markets as many closed for the May Day holiday. Wall Street, coming off its best month in nine years, is expected to open marginally higher, with Dow Jones Industrial Average standing 0.7% up at 8174.0 at the London close.
Special report: After a stock market collapse in 2008, could shares mount a recovery in 2009?
In London, miners were on the front foot after an analyst upgrade. Kazakhmys gained 44.5p to 579.5p, Eurasian Natural Resources 22.5p to 617.5p and Vedanta Resources rose 50p to 1124p after Citi brokers lifted their target price on the stock.
Among the banks, Royal Bank of Scotland was 1.9p better off at 43.7p as Deutsche Bank brokers were the latest to make positive noises on the sector this week. But Barclays paused for breath after a strong run, down 5p to 276.5p as markets mulled the potential for a further clampdown on lucrative investment banking.
Property firm Land Securities was among the leading fallers following reports that the firm will launch a venture capital arm to invest in new retail chains. LandSec was 17.5p down at 545p or 3%, while elsewhere in the sector British Land shed 9.75p to 421p and Hammerson was 5.75p off at 310.75p.
Thomas Cook also lost 1% as the fall out from the spread of swine flu continued to take its toll. Shares were down 3p at 259.75p following the firm's decision to suspend flights to Mexico earlier this week.
In the FTSE 250, Rentokil Initial surged almost 11% after the pest control and washrooms company posted better than expected first quarter figures. It also signalled further progress in its recovery strategy, encouraging shares to jump 11p to 76.75p.
Car dealership Pendragon was another strong riser after it announced a new three-year financing package, just in time to beat a deadline for the publication of its full-year results. Shares were 7.25p higher at 21.25p, or 52%.
FT publisher and Penguin books owner Pearson this morning reported a 26% hike in first-quarter revenues to £1bn. It expects to achieve full-year adjusted earnings at or above the 2008 level of 57.7p per share.
However, CEO Marjorie Scardino said the tough economic environment 'makes us cautious about this year', but added 'we're encouraged by the start we've made'. The group will propose a final dividend of 22p a share, giving a total dividend for 2008 of 33.8p, up 7% on last year.
But analysts were cautious, calling the statement 'disappointing', while one in particular said the numbers and forecasts suggests the underlying business will be down 15% in 2009.
'Pearson shares have delivered a good solid run for the last six months,' says Richard Curr, head of dealing at Blue Index, 'and [we] feel the shares are high enough for now. Add in the uncertain forecast, and we are firm sellers at this time, with a target price of 651p.' Pearson shares were down 4.5p to 702p.
FTSE 100 INDEX - LAST THREE MONTHS:
Shares in business information group Informa gained 42p - or 14% - announced a fully underwritten 2-for-5 rights issue to raise £242m. The group said it had taken the decision in view of 'an economic environment that shows no signs of improvement'.
CEO Peter Rigby said cost savings of £30m had already been saved from the final dividend, but the Board are 'very intent on retaining value for shareholders'.
'[We] see the move as a prudent step for Informa,' says Curr at Blue Index, 'as it not only secures finances for an uncertain market, but also makes the group an attractive bid target. We are buyers of Informa shares, with a short term target of 364p.'
Marks & Spencer suffered as Deutsche Bank repeated its sell rating on M&S. It is concerned that 'continuing execution errors leave the door open for further sales and margin setbacks' and of the 'ineffective nature of promotions'. It did, however, lift its target to 300p from 250p. The shares were down 2.75p at 336p.
Elsewhere, Morgan Stanley and UBS tipped defensive stock National Grid, up 8p at 572p.
Regal Petroleum revealed operating losses were up 18% to $16m (£11m). The shares initially fell before surging ahead. They were up 3p at 51.7p - more than 6% - as the Ukraine-focused oil and gas explorer put the increased losses mainly down to foreign exchange-related charges.
It also forecast higher production from its existing wells in 2009 that would reverse the declining trend in revenue. The Aim-listed company also sits on $78.5m in cash.
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