FTSE in-depth: Trading hit by greek tragedy

By Etain Lavelle for MailOnline
Updated: 03:34 EDT, 14 June 2011

Lingering doubts over Europe's ability to tackle the Greek debt crisis continued to undermine stock markets on both sides of the Atlantic in the week's opening session.

Yesterday: The Footsie saw a small rise.

A sense of cautious optimism, fuelled by the return of blue chip bid rumours, was dampened after the session closed and rating agency S&P once again slashed Greece's credit rating, this time to just two notches above default.

Over on Wall Street, the DJIA was up marginally at the start of trade, but fears of weakening growth in China ahead of key economic data today - and ahead of US retail sales figures for May - ensured any gains were muted on both sides of the pond.

The Footsie closed down 0.13%at 5773.46, and the DJIA ended a flat 0.08% lower at 11961.96.

The travel sector was under the spotlight after US cruise giant Carnival said it was cutting guidance for the second half of the year as its business has been negatively impacted by the continuing conflict across North Africa after the Arab Spring uprisings, as well as the earthquake and nuclear disaster in Japan, and rising fuel costs.

The group, which is the world's biggest cruise ship operator, said the combined effect will amount to $0.20 per share in the second half of the year although it intends to issue clearer guidance for the year when it reports second quarter results later this month.

Shares in Carnival dropped 45.00p to 2254.7p.

The news proved a drag on other companies in the travel sector, pulling TUI Travel down 2.50p to 210.40p, while second line travel operator Thomas Cook fell 2.20p to 134.10p and BBA Aviation fell 1.60p to 207.2p.

Elsewhere on the downside, Aggreko led the list of blue chip fallers after competition in the temporary power business intensified following the acquisition of US group APR Energy - the second largest player in the market - by Horizon Acquisitions, an investment vehicle backed by financier Hugh Osmond.

Numis downgraded the stock to 'sell' from 'hold'.

'Although we believe there are sufficient growth opportunities for both groups, the hint of more competition as well as an alternative stock market play on the shortage of power in developing countries suggests there may be some profit taking,' said Numis analyst Mike Murphy. Aggreko fell 61p to 1874p.

The mining sector provided a flutter of excitement in a session otherwise dominated by few corporate stories. ENRC led the footsie higher on speculation that newly-listed Glencore is planning a £12bn takeover swoop.

The Kazakh miner was bid 34.50p higher at 776.5p, after falling nearly 24pc since mid-April. Arbuthnot said the group would make an attractive acquisition target as its current share price, which has suffered because of well-publicised corporate governance issues, 'significantly undermines its assets'.

The broker recommends ENRC as a 'strong buy' with a price target of 1050p. Other miners in demand included Kazakhmys, which jumped 26.00p to 1240p after securing a loan from China, while second-liner Kenmare Resources jumped 2.13p to 47.83p.

Financial stocks were also bid higher, after the FSA extended the deadline by which they need to settle claims regarding the misselling of payment protection insurance (PPI).

Lloyds was up 0.64 at 47.64p following weekend reports it is to cut 15,000 jobs as part of a plan to save £1bn. Barclays was equally well bid, firming 3.85p to 260.35p.

But Imperial Tobacco slid 29.00p to 2056p after announcing a sharp decline in sales volumes in Spain as the impact of a ban on smoking in public places and a duty rise on cigarettes was compounded by a weak economic backdrop.

Reckitt Benckiser also fell 44p to 3425p after Morgan Stanley cut its rating to 'equalweight' from 'overweight' and trimmed the price target down to 3,800p from 4,200p.

International Power was weakened after Credit Suisse analysts trimmed the price target back to 300p from 335p but kept an 'underperform' rating.

'Although it lags the sector, we still do not see the company as cheap, not do we consider it likely that the strong growth of 03-08 - and subsequent stock price upside - is to be repeated,'

Credit Suisse said. The shares fell 3.00p to 312p. Among the smaller cap stocks, Faroe Petroleum shed 22p to 148p after announcing it will plug and abandon its Lagavulin exploration well.

Still, analysts at Arbuthnot initiated coverage on the group with a 'buy' recommendation and a 265p price target, pointing out that Faroe had £132m of cash as of the end of December.