FTSE in-depth: Google threat to Rightmove

By Tamsin Brown
Updated: 03:23 EDT, 4 December 2009

Rightmove tumbled 10% after it emerged the powerful Google could soon be traipsing on its patch. The search engine giant is said to be considering a launch into the UK online property market next year.

Taking stock: Yesterday in focus.

It has already set up a property site in Australia, through which estate agents can list properties without paying a fee, and it has apparently been talking to estate agents about doing something similar here.

Given Google's success in the search engine business, investors were evidently shaken by concerns that its potential entry into the British online property market could rock Rightmove's business.

They took little heed of a chorus of analysts who insisted it would not pose a serious threat to the UK firm's position.

WH Ireland's Eric Burns noted Rightmove's business model had proved resilient in the face of launches of other rival sites such as Globrix and Property Live.

He said: 'Whilst both are free to the agent, neither have achieved anything like the traction required to displace Rightmove's market dominance.'

Lorna Tilbian at Rightmove's broker Numis pointed out that three quarters of property searches on Google start with a user typing 'Rightmove'.

But shares in the property website group still lost 57.6p to close at 500p. Its chairman Scott Forbes must be grateful that he chose to exercise options over 600,000 shares at the start of the week before the drop. He made a £1.24m profit. The FTSE 100 yo-yoed between positive and negative territory throughout the day before closing down 14.39 points at 5313.

Over on Wall Street, the Dow Jones Industrial Average had reversed early gains to trade 10.5 points lower at 10,442.18 by mid-session after the release of data showing that the US service sector unexpectedly shrank in November.

Back on this side of the Atlantic, speculation mounted ahead of the next FTSE 100 reshuffle due to be announced next Friday. Russian gold miner Petropavlovsk (down 5p at 1310p), formerly known as Peter Hambro, is tipped to be promoted to blue chip status after its sparkling performance this year. It share price has more than trebled since the start of January. Tour operator Thomas Cook (up 1.9p at 216.3p) is seen as the most likely candidate to be booted out.

Financials dominated the risers' board with sentiment helped by Bank of America's plans to repay its £27bn of US government bailout funds.

Royal Bank of Scotland led the way, up 1.575p at 35.065p, Lloyds Banking Group was up 2.35p firmer at 55.44p while Barclays was 7p higher at 304.55p.

Traders also reported talk of a big programme trade to buy banks and sell miners. Mining stocks were certainly under the cosh. Xstrata was the biggest FTSE 100 faller, shedding 44p to 1105p, Rio Tinto was 108.5p lower at 3188.5p and Anglo American was off 71p at 2650p

The risers and fallers' boards were at odds with advice from Goldman Sachs in its sector outlook for 2010. It downgraded its rating on banks to neutral after a strong performance. It also cut its rating on the insurance sector to underweight saying it faces ' structural issues.' The US investment bank believes clients should instead stay exposed to commodity-related sectors.

Investors hung up on Vodafone, down 2.8p to 140.3p as Collins Stewart advised selling the stock saying it looks to be 'effectively dead money for the next few years.'

Aim-listed Petra Diamonds carved out gains of 3½p to 62½p after raising £72m through a share placing. The shares were snapped up by 40 institutional investors. Petra will use the funds to double its stake in its Cullinan mine in South Africa and strengthen its balance sheet.

Management of software firm Aveva clearly impressed analysts over a dinner in London this week even though the after dinner speaker Rear Admiral Terry Loughran was 'rather non PC' according to one attendee. Shares in Aveva firmed 19p to 993p as Panmure Gordon raised its 2011 forecast and repeated its buy advice in a note entitled: 'I came, I saw, I ordered seconds.'

Shares in Cohort slumped 43¾p to 112¼p after the technology firm said that it had come to light that income from certain contracts at its subsidiary Systems Consultants Services had been overstated to the tune of £1.85m. As a result, Cohort's performance for the full year April 2010 will be significantly below expectations, it said.