FTSE close: Reckitt, BP down; WHSmith up

By Reuters
Updated: 12:15 EDT, 14 April 2011

17.10 (close)

Blue chip stocks were under pressure today as the shock departure of Reckitt Benckiser's boss compounded fears over China.

Investors were left reeling from the news that Bart Becht is to leave after 16 years at Reckitt, sending the household goods giant more than 7% lower.

The FTSE 100 Index closed 46.6 points down at 5963.8, dragged lower by miners amid concerns that China will need to sanction another interest rates rise in order to curb inflation.

Disappointing US jobs data ensured America's Dow Jones Industrial Average also fell into the red, with a report showing claims for unemployment benefits rose unexpectedly for the first time in three weeks.

The pound strengthened as Nationwide Building Society revealed UK consumer confidence increased in March from record lows, boosting the Bank of England's case for an interest rate hike.

Sterling rose to 1.63 dollars and 1.13 euros.

Cillit Bang-to-Dettol group Reckitt was the Footsie's biggest faller after Mr Becht's retirement blow.

Mr Becht, who has overseen rapid growth at Reckitt Benckiser since the 1999 merger of Reckitt & Colman and Dutch group Benckiser, said he planned to step down in September.

He will be succeeded by Reckitt veteran Rakesh Kapoor, but news of the change took investors by surprise. Reckitt dropped 251p to 3115p.

Miners also dominated the fallers board due to the China rate worries and knock-on impact on demand.

Antofagasta fell 51p to 1355p and Kazakhmys was 41p lower at 1368p.

BP shares dropped 4.2p to 460.1p as it announced it had secured more time to salvage its £10 billion share-swap and exploration deal with Russian-government owned Rosneft.

The group also held a difficult annual shareholder meeting as it faced angry protesters, with a number thrown out of the gathering after attempting to storm the stage.

On a busy day for corporate updates, retailers WH Smith and Debenhams impressed analysts with steady half-year performances in the face of testing economic conditions.

WH Smith rewarded shareholders with an 18% jump in its interim dividend after profits rose 3% to £64m.

Shares leapt 24.4p to 475.1p, a rise of 5% after chief executive Kate Swann offset a 4% fall in total sales through a continued focus on higher margin product categories and tight cost control.

Debenhams also announced its first dividend since 2008 and said it had now produced six consecutive halves of pre-tax profits growth.

But the positive trading performance, including a 4.5% rise in underlying profits, was offset by news that chief executive Rob Templeman planned to step down in September, triggering a 0.25p decline in the company's share price to 66.6p.

Dunelm added to the retail cheer today as the homewares chain reported that total sales rose 9.4% to £139m in the 13 weeks to April 2, while margins also improved after the group had more success in passing on cost hikes.

Shares were 6.2p higher at 446.2, while fellow homewares retailer Next benefited from the update as its shares rose 12p to 2161p.

The biggest Footsie risers were Rolls-Royce up 9.5p to 633.5p, Resolution ahead 4.6p to 308p, G4S up 3.8p to 272.4p and Associated British Foods up 12p to 1031p.

The biggest Footsie fallers were Reckitt Benckiser down 251p to 3115p, Antofagasta off 51p to 1355p, Kazakhmys down 41p to 1368p and Eurasian Natural Resources down 21.5p to 909p.

15.55: The Dow Jones has reduced its losses to trade down 37.5 points at 12,233.5 in what is proving a volatile session.

The FTSE 100 is 41.6 points lower at 5,968.8.

14.45:

We have more on the departure and corporate record of Reckitt Benckiser chief Bart Becht.

The stock is down 6% or 214p at 3,153p as investors ponder what the firm's future holds without Becht.

He is being replaced by Reckitt veteran Rakesh Kapoor, who joined the firm's Indian operation in 1987.

The Dow Jones has opened 56.3 points lower at 12,214.7. The US saw a surprise rise in weekly jobless claims, and producer prices were up 0.7% in March.

On the first quarter earnings front, profits at toymaker Hasbro missed expectations but its sales were better than expected. Google will report after the closing bell.

The Footsie is down 58.4 points at 5,952.

Brent Crude is trading at just over $120 a barrel, little changed from yesterday. Gold was fixed this morning at $1,457.50 an ounce, unchanged from the previous close.

12.30:

The FTSE 100, which has fluctuated throughout the week, has now dropped 60.6 points to 5,950.1.

Big fallers include miners Antofagasta and Eurasian Natural Resources, down 43.5p to 1362.5p and 26.5p to 904p respectively.

BP shares were 4.4p lower at 459.8p as it announced it had secured more time to salvage its £10 billion share-swap and exploration deal with Russian-government owned Rosneft.

Debenhams announced its first dividend since 2008 and said it had now produced six consecutive halves of pre-tax profits growth - but the positive trading performance, including a 4.5% rise in underlying profits, was offset by news that chief executive Rob Templeman planned to step down in September.

It triggered a 0.2p drop in the company's share price to 66.6p. For more on the story, click here.

Dunelm added to the retail cheer as the homewares chain reported that total sales rose 9.4% to £139m in the 13 weeks to April 2, while margins also improved after the group had more success in passing on cost hikes.

Shares were 3.8p higher at 443.8p, while fellow homewares retailer Next benefited from the update as its shares rose 2.5p to 2151.5p.

3I Group rose 2.9p (1.1%) to 264.6p boosted by the partial realisation of its investment in Go Outdoors announced late on Wednesday, and technical factors following a 12% fall in April, traders said.

Chip designer ARM Holdings continued its recent erratic form, falling 11p (1.8%) to 587p, having risen 6.7% in the previous session on excitement surrounding Microsoft's conference in Las Vegas and its use of ARM-based technology.

Concerns over the impact on the supply chain as a result of Japan's earthquake remain.

'(The Japan supply issue) is not going to affect in the short term, it's more the long term,' Martin Dobson, head of trading at Westhouse Securities, said.

'If they do get supply problems with components, those will probably manifest themselves in forward earnings and I think you'll probably see cautionary statements coming from a few tech components and chip makers and the hardware companies if they have Japanese supply.'

10.10: The shock departure of long-standing Reckitt Benckiser boss Bart Becht sparked a slump in shares at the household products giant today.

The Cillit Bang-to-Dettol firm dropped 7.4% or 250p to 3,116p as investors expressed disappointment at September's planned move, which comes six months after the departure of its chief financial officer.

'It was one of the most highly regarded management teams, I would have said, in the FTSE,' Martin Dolan, an analyst at Espirito Santo, says.

'The fact that they've both gone now I think is basically going to cause some people to reassess (the situation).'

The FTSE 100 swung lower, down 20.6 points at 5,989.8, after lacklustre sessions in Asia and Wall Street overnight.

Miners fell along with base metal prices as investors shied away from riskier assets. Analysts cited concerns over Chinese inflation.

'(Chinese inflation) might well be a focus. Overnight the Asian markets were tangibly cut and we saw interest rate policy in likes of Singapore increase, which may have added a little to nerves as we wait for those Chinese inflation (and GDP figures on Friday),' said Keith Bowman, analyst at Hargreaves Lansdown.

Chinese inflation in March accelerated to 5.4% from a year earlier, Hong Kong media said on Thursday, which will add weight to the government's vow to rein in price rises. Economists polled by Reuters had expected annual inflation in March to be 5.2%, up from February's 4.9%.

'For the coming months we expect increasing volatilities,' analysts at Unicredit said in an equity strategy note, citing the impact of China's inflation and growth concerns.

In the resources sector, commodities trading giant Glencore published details of long-awaited plans to raise up to $12.1bn in a London and Hong Kong offering.

Banks, Wednesday's top performers after JP Morgan results helped boost confidence, retreated as investors locked in profits on a sector still dogged by regulatory uncertainty. Lloyds Banking Group shed 0.4p (0.7%) to 60.3p as Barclays Capital cut its target price and kept its 'underweight' rating on the bank, saying the UK's Independent Commission on Banking's stance on Lloyds 'will further dilute returns'.

On the upside, Intercontinental Hotels rose 14p (1%) to 1,295p with traders citing a bullish note from Morgan Stanley. Oil services firms AMEC, Wood Group, and Petrofac rose up to 0.6% as Unicredit initiated coverage on all three companies with 'buy' ratings.

Unilever climbed 18.3p (0.9%) to 1,946.3p as French peer Danone released a strong first-quarter update.

Some good news for retailers though, with WH Smith and Debenhams both higher after impressing investors with their performances in the face of challenging economic conditions. Debenhams rose 1% or 0.65p to 67.45p after it announced its first dividend since 2008 and said it had produced six consecutive halves of pre-tax profits growth. The only downside for the City came with news that chief executive Rob Templeman planned to step down in September.

WH Smith also rewarded shareholders with an 18% jump in its interim dividend after half-year profits improved 3% to £64 million. Shares leapt 30.85p to 481.55p, a rise of 7% even though sales were down 4%.

Marks & Spencer rose 1.9p (0.5%) to 369p and there was a broadly upbeat update from Ideal Shopping Direct, up 3.2p (1.8%) to 186.2p.