LONDON (ShareCast) - - Comments from Harry Reid weigh on sentiment
- Intel rumoured to be interested in ARM
- Ex-div stocks provide a drag

The FTSE 100 was trading firmly in the red on Wednesday, tracking US stocks lower overnight as the market's focus turns from Greece to the US 'fiscal cliff'.

The main US equity benchmarks ended yesterday lower after remarks from the US Senate majority leader, Nevada Democrat Harry Reid, to the effect that “little progress” has been made so far on avoiding the fiscal cliff by year-end. Reid added that an increase in the US debt ceiling is necessary.

In his own words, the Republicans "talked some happy talk about doing revenues, but we only have a couple weeks to get something done. So we have to get away from the happy talk and start talking about specific things”.

"The impact of his comments demonstrate just how sensitive markets are to developments or the lack of, to the US fiscal cliff," said market strategist Ishaq Siddiqi from ETX Capital.

"With around four weeks left until the end of the year, US lawmakers will really need to dig in their heels and pull out a deal to avert the fiscal cliff. However, at this point it seems that a deal may not be forthcoming in the next two weeks or even three - we are likely to see a game of brinkmanship played in Washington before an announcement is made and as a result, enthusiasm to build positions appears to be capped," he said.

Stock markets across Europe yesterday were given an initial boost by Monday's news that Eurozone finance ministers had agreed to release the next tranche of the bailout to Greece. However, bourses pared gains as markets digested the deal with analysts saying that the agreement just kicks the can down the road for the heavily indebted nation.

FTSE 100: M&S, United Utilities and ARM on the rise

High Street giant Marks & Spencer jumped after announcing that its pension deficit at March 31st was at £290m. "This represents a substantial reduction in deficit from £1.3bn as at March 31st 2009," the group said.

Water and sewage services group United Utilities gained after reporting that revenue in the first half rose from £793m to £823m as regulated prices increases offset reduced commercial volumes and lower property sales associated with the water business.

Meanwhile, chip designer ARM Holdings moved higher after the Daily Mail reported about a possible 1,200p bid from US tech giant Intel. That compares with yesterday's close of 758p.

Medical technology group Smith & Nephew fell after announcing that it is to buy the assets of US-based Healthpoint Biotherapeutics for $782m in an attempt to bolster its position in advanced wound care. However, analysts at Investec this morning said that the acquisition takes the company into "riskier areas' where future performance will be linked to the outcome of clinical trials.

Distribution firm Bunzl dropped after Citigroup cut its target price from 1,250p to 1,190p and kept its 'neutral' rating. Insurance firm Resolution fell after UBS cut its rating from 'buy' to 'neutral', citing disappointing nine-month trading, EV write-downs, UK restricting charges and the recent share price performance. Telecoms group Vodafone was suffering from a downgrade by Berenberg to 'hold'.

In contrast, contract caterer Compass was given a lift by Jefferies, which raised its recommendation from 'underperform' to 'hold', saying that the company's announced buy-back, dividend increase and reiterated guidance "exudes confidence".

AMEC, Johnson Matthey, National Grid and Tate & Lyle were registering losses this morning after going ex-dividend.

FTSE 250: Tavlivaara and Kenmare disappoint with production targets

Nickel miner Talvivaara disappointed after re-assessing its production targets following the gypsum pond leakage which stopped operations earlier this month. The company now expects full-year output to reach 13,000t of nickel, well below the previous 17,000t estimate.

Kenmare Resources, the titanium feedstock miner, was also down after warning that as a result of production issues, it expects its full-year production to be lower than previous guidance of 630,000 tonnes of ilmenite and 50,000 tonnes of zircon.

Insurance group Lancashire Holdings was a heavy faller after going ex-dividend.

Investment trust RIT Capital Partners was lower after saying net asset value fell in the half year to September 30th as some of its defensive hedges under performed in a rising market.

Support services and construction firm Interserve rose after saying that it is to transfer its remaining interest in a portfolio of 19 PFI assets to the trustee of its pension scheme at a valuation of £55m to address the current pension scheme funding shortfall.


FTSE 100 - Risers
Burberry Group (BRBY) 1,278.00p +3.06%
Marks & Spencer Group (MKS) 389.20p +2.77%
United Utilities Group (UU.) 684.50p +2.32%
ARM Holdings (ARM) 769.50p +1.52%
Severn Trent (SVT) 1,573.00p +1.22%
Capita (CPI) 760.00p +1.20%
Aberdeen Asset Management (ADN) 332.40p +1.16%
Next (NXT) 3,649.00p +0.91%
BG Group (BG.) 1,069.50p +0.90%
Weir Group (WEIR) 1,812.00p +0.61%

FTSE 100 - Fallers
Bunzl (BNZL) 1,035.00p -3.63%
Tate & Lyle (TATE) 761.50p -2.25%
International Consolidated Airlines Group SA (CDI) (IAG) 166.80p -2.00%
Lloyds Banking Group (LLOY) 45.49p -1.99%
National Grid (NG.) 699.00p -1.89%
Evraz (EVR) 235.00p -1.88%
Amec (AMEC) 1,011.00p -1.65%
Xstrata (XTA) 996.80p -1.45%
Glencore International (GLEN) 334.00p -1.42%
Hargreaves Lansdown (HL.) 760.00p -1.30%

FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 1,587.00p +3.73%
Debenhams (DEB) 117.70p +3.70%
BBA Aviation (BBA) 208.50p +2.71%
Menzies(John) (MNZS) 588.00p +2.62%
New World Resources A Shares (NWR) 258.50p +2.46%
TalkTalk Telecom Group (TALK) 217.30p +2.02%
Man Group (EMG) 74.70p +1.98%
Redrow (RDW) 160.70p +1.97%
Perform Group (PER) 387.10p +1.87%
JD Sports Fashion (JD.) 715.00p +1.78%

FTSE 250 - Fallers
Lancashire Holdings (LRE) 790.00p -7.44%
Kenmare Resources (KMR) 31.05p -7.20%
Talvivaara Mining Company (TALV) 93.05p -6.39%
Lonmin (LMI) 261.90p -4.76%
Intermediate Capital Group (ICP) 286.30p -3.80%
Centamin (DI) (CEY) 57.50p -3.69%
Dialight (DIA) 1,077.00p -2.27%
Telecom Plus (TEP) 875.50p -2.18%
Yule Catto & Co (YULC) 168.50p -2.03%
Dixons Retail (DXNS) 26.40p -1.86%

BC

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE