LONDON (ShareCast) - - Greek bailout delay concerns sink stocks
- Draghi expects Eurozone to remain 'weak'
- BoE and ECB keep policy stance unchanged

After solid gains in the morning session, equity markets in London swung into the red in afternoon trade, after dreary comments from Mario Draghi and concerns about a bailout delay in Greece weighed on sentiment.

The FTSE 100 started the day firmer, rebounding after a 1.6% drop after ‘fiscal cliff’ worries in the US and gloomy growth forecasts in the Eurozone sparked a sell-off on Wednesday.

As expected, the Bank of England’s Monetary Policy Committee (MPC) at noon voted in favour of keeping the key interest rate and level of asset purchases unchanged for November, as expected. The Bank Rate was left at the record-low level of 0.5% for the 44th straight month in a row, while its asset purchase programme was maintained at £375bn.

Analyst Simon Hayes from Barclays Research said today: “Although this was in line with expectations, it is only a few weeks since there was a widespread view that QE would be increased, and it is likely that the committee gave active consideration to an expansion.”

The European Central Bank (ECB) also decided to keeps its key interest rates unchanged today, in line with predictions, but the following press conference with President Mario Draghi spooked markets in afternoon trade.

He said: “Economic activity in the euro area is expected to remain weak […] It is essential for governments to support confidence by forcefully implementing the necessary steps to reduce both fiscal and structural imbalances and to proceed with financial sector restructuring.”

In Greece, policy-makers last night voted in favour of the country’s proposed austerity measures, albeit by a narrow margin, leaving the parliamentary vote on next year’s budget on Sunday to unlock the next round of financial aid.

However, stocks went into reverse late on after Bloomberg reported that the next tranche of the Greek bailout won’t come next week. The agency cited an EU official as saying that ministers will not make a decision on aid until late November as they wait for a final report from the Troika on how Greece is complying with the terms of its bailout.

"This headline prompted a huge bout of risk aversion which saw investors dump risk assets and instead favour core government bonds with German bunds getting a nice little lift," said market strategist Ishaq Siddiq from ETX Capital.

"Typical flight to safety move as fears that EU ministers will leave Greece virtually broke in their delay to unlock funds."

FTSE 100: Burberry and Rangold claw their way back

Burberry and Randgold, two of the worst performers from yesterday's session after reporting results, were among the highest risers today. Burberry was being helped higher by Barclays Capital, which raised its target price on the stock from 1,100p to 1,200p and maintained its 'overweight' rating.

Also in demand was insurance group Aviva after saying that it nearing the sale of its US life and annuities business, as it reported a slight rise in net asset value.

Experian gained after hiking its dividend and reporting strong revenue grout in the first half. The company also announced an efficiency programme designed to save the firm $75m a year.

Meanwhile, security group G4S was leading the fallers on reports that it has lost the contract to operate the Wolds prison as the jail returns to public-sector management next year.

Mining group ENRC fell after saying that revenue declined in the first nine months of 2012 due to lower selling prices for its principal commodities.

Utilities peers Pennon and Severn Trent were out of favour after Nomura cut its target prices for both stocks and retained ‘neutral’ ratings. United Utilties fell by a lesser amount but still finished in the red after the same broker downgraded its recommendation from ‘buy’ to ‘neutral’.

FTSE 250: Balfour Beatty plummets after profit warning

Construction group Balfour Beatty dropped after saying in its third-quarter trading update that profitability this year will be "slightly lower than expected at the time of the half-year results". However, this will be slightly offset by a lower tax rate.

BTG, the specialist healthcare company, rose after saying that it is likely to meet or beat consensus forecasts and is on the hunt for further acquisitions.

Chemicals group Yule Catto surged after saying that it is trading in line with expectations and is going to change its name to Synthomer.

Cable and Wireless Communications, which owns telecoms operators, gained after maintaining its full-year guidance, saying group EBITDA will be similar to 2011/12.

Light-emitting diode firm Dialight fell after it reported delays to a major contract had hit trading in its signal lighting division. The firm said trading in that business was below expectations due to a hold-up in the award of a significant new contract for obstruction lighting.


FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 7,070.00p +1.73%
Croda International (CRDA) 2,210.00p +1.33%
British American Tobacco (BATS) 3,174.00p +1.26%
Burberry Group (BRBY) 1,214.00p +1.25%
Carnival (CCL) 2,521.00p +1.16%
Resolution Ltd. (RSL) 237.70p +1.02%
Royal Bank of Scotland Group (RBS) 274.40p +0.66%
ARM Holdings (ARM) 709.50p +0.64%
Tullow Oil (TLW) 1,401.00p +0.57%
Aviva (AV.) 330.30p +0.55%

FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 294.60p -3.41%
G4S (GFS) 259.20p -3.14%
CRH (CRH) 1,130.00p -2.33%
Kazakhmys (KAZ) 686.50p -2.28%
Pennon Group (PNN) 677.50p -2.17%
Land Securities Group (LAND) 794.50p -2.03%
Evraz (EVR) 242.40p -1.86%
Serco Group (SRP) 558.00p -1.85%
ITV (ITV) 85.80p -1.61%
Meggitt (MGGT) 372.50p -1.56%

FTSE 250 - Risers
BTG (BTG) 352.40p +7.57%
Yule Catto & Co (YULC) 165.60p +6.98%
Cable & Wireless Communications (CWC) 38.00p +5.76%
Spirent Communications (SPT) 146.00p +4.89%
Supergroup (SGP) 690.00p +4.62%
Ruspetro (RPO) 103.00p +3.00%
Pace (PIC) 193.40p +2.82%
Redrow (RDW) 161.60p +2.80%
Mitchells & Butlers (MAB) 329.40p +2.62%
Dixons Retail (DXNS) 24.72p +2.36%

FTSE 250 - Fallers
Balfour Beatty (BBY) 250.10p -18.27%
Chemring Group (CHG) 242.80p -5.89%
Genus (GNS) 1,366.00p -5.79%
Dialight (DIA) 1,115.00p -5.67%
Atkins (WS) (ATK) 677.50p -5.57%
Interserve (IRV) 368.20p -5.54%
Talvivaara Mining Company (TALV) 121.60p -4.63%
Carillion (CLLN) 296.70p -4.29%
FirstGroup (FGP) 186.60p -4.26%
Booker Group (BOK) 100.50p -3.74%

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