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FTSE 100 close: BA higher, Man Group down

By Adrian Lowery
Updated: 11:56 EDT, 31 July 2009

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A good showing by BA shares helped calm Footsie nerves as markets held their breath for US GDP data.

The FTSE 100 index hit a seven-month high yesterday on a busy day of corporate news, but today closed 23.25 points lower to 4,608.4 after confirmation that the US economy shrank again in the second quarter of the year. The US GDP fall of 1% was actually less than had been expected and analysts had been optimistic for the longer term propects for shares.

Darren Winder, head of macro and strategy research at Cazenove, said: 'I think the profits picture is continuing to get better rather than worse.

'I think there's still considerable valuation support left in the market. It has got more breadth over the last few weeks,' he said.

'I think the US GDP figures confirm that output fell a lot less in Q2 than it fell in Q1. We've seen that in the UK; I think we'll get confirmation of that for the US later today, and I think we're going to see that in the other major economies,' Winder added.

In today's trading, British Airways shares got off to a solid start despite a record first-quarter loss of £148m. Comments from chief executive Willie Walsh about steadier trading over the summer months was enough to lift shares by 6% or 8.1p to 142.4p.

Hedge fund Man Group topped the FTSE 100 losers' list with a 10.5p drop to 276.75p after UBS downgraded the stock to sell from neutral. The broker blamed the threat by the US commodities regulator, CFTC, to regulate in order to reduce commodity price spikes.

'This is negative for Man as its key fund, AHL, has 30% of its portfolio in commodities,' UBS says in a note. The broker, however, keeps its price target of 245p unchanged.

Telecoms group BT held on to most of the 13% improvement seen yesterday after it posted better-than-expected first quarter figures and said there were signs of progress at its troubled IT services division. Shares were down 0.3p at 126.7p.

In the FTSE 250, Rentokil Initial shares hit 12-month highs with a 6.5p rise to 97p after it beat second-quarter profit forecasts and raised its target for cost-cutting.

UBS analysts think a quicker-than-expected recovery at the group's City Link parcels business could drive upgrades to 2010 forecasts.

However, Seymour Pierce analysts think the good news is already factored into the pest control to parcel delivery firm's share price, and keep a 'sell' rating on the stock.

Shares in Rank Group jumped 11.5% or 8p to 77.75p after the bingo hall and casino operator reports first-half profits ahead of market expectations.

Investec upgraded its full-year profit forecast by about 26% to £43m and lifted its target price to 95p from 85p, while standing by its 'buy' recommendation.

United Business Media - another firm to report results today - rose 53p to 424.25p after it increased its half-year dividend and said bookings for major events in the second half were up on a year earlier.

Meanwhile, Luminar shares rose 10p to 150p as the nightclub operator announced plans to raise funds for an expansion drive.

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