LONDON (ShareCast) - Strong gains in the utilities sector after a takeover approach for Severn Trent and some well-received results from Babcock International weren't enough to lift markets into positive territory by Tuesday lunchtime, as the FTSE 100 snapped an eight-day winning streak.

"The broader market malaise is arguably a case of traders seeking impetus for the next leg up and finding none on what is a relatively quiet news day," said Matt Basi, Head of UK Sales Trading at CMC Market, this morning.

The Footsie opened with slight losses after hitting a fresh multiyear-high of 6,632 last night, a level not seen since late 2007 before the financial crisis hammered stock markets worldwide.

Weakness in the mining sector was dominating the direction of markets today after JPMorgan Chase cut its economic growth forecasts for economic powerhouse China, a huge importer of commodities. The US bank expects China to expand by 7.6% in 2013, down from the previous 7.8% estimate.

Also limiting the upside on markets this morning were the ZEW surveys which showed that investors are less optimistic about the European economy this month. After a sharp decline last month, the ZEW indicator of economic sentiment for Germany gained just 0.1 points compared to the previous month to hover at the 36.4 point-mark, far below the expected increase to 38.3. Meanwhile, economic expectations for the wider Eurozone improved by 2.7 points to 27.6 points but well under the predicted increase to 39.0.

Talks of a possible 'exit strategy' from the Federal Reserve's $85bn-a-month asset purchase programme have also weighed on the bullish mood over the last day or two, in the aftermath of last month's better-than-expected jobs report and upwards revisions to prior month's figures. In turn, there are worries that policymakers in the Eurozone could adjust their own use of stimulus measures if the Fed begins to scale back quantitative easing in the States.

FTSE 100: Severn Trent soars on takeover speculation

Severn Trent has confirmed press speculation that it has received a bid approach from a consortium of investors which is rumoured to value the UK utility company around £5.3bn, causing shares to rocket this morning. According to the Financial News magazine, sources said that a potential offer could come between 2,250p and 2,300p a share, compared with Monday's closing price of 1,825p.

Sector peers United Utilities, National Grid, SSE and Centrica were also making decent gains.

Also in favour this morning was engineering support services outfit Babcock which rose strongly after reporting a better-than-expected set of annual results, lifting its dividend and saying it is well positioned for strong progress in the year ahead.

Fresnillo, Anglo American, Glencore Xstrata and Rio Tinto were among the worst performers, tracking metal prices lower.

British Land recorded an annual profits rise of 1.9%, driven by the strong performance of property assets, but the stock was being pressure lower by a downgrade by Investec from 'buy' to 'reduce'.

Banking group RBS was in the red ahead of its annual general meeting. The bank is expected to come under pressure from shareholders due to over £600m paid in bonuses despite the company recording a loss last year.

Airline IAG fell after saying it is launching a senior unsecured convertible bond offer of up to €400m to fund its acquisition of Spanish carrier Vueling, enhance liquidity and lower its cost of capital.

Vodafone was also under the weather despite saying that it is to receive £2.1bn via a dividend from its 45% stake in Verizon Wireless (VZW). Analysts have cautioned on Vodafone's growing dependency on the VZW payout, whilst digesting what this means for Verizon's possible buy-out of the joint venture.

FTSE 250: Lonmin drops after suspending operations

Shares in Lonmin, the world's third largest platinum producer, took a hit after the group suspended all work at its Marikana mine following a refusal by employees to go underground, despite arriving at work. The strike follows a weekend of violent outbreaks in the Rustenberg region, which saw two people from the neighbouring community killed.

Online betting company Betfair slumped after saying that it has rejected two revised proposals from CVC Capital Partners. Talks have now been terminated regarding the latest offer, which valued the company at nearly £1.0bn.

Leading the upside was ICAP after maintaining its dividend despite a 20% fall in pre-tax profits in the year to end-March. The company said it managed to deliver £10m more cost savings than first expected.


FTSE 100 - Risers
Severn Trent (SVT) 2,093.00p +14.68%
Babcock International Group (BAB) 1,152.00p +5.79%
United Utilities Group (UU.) 768.50p +3.92%
Croda International (CRDA) 2,590.00p +3.35%
Rolls-Royce Holdings (RR.) 1,207.00p +1.94%
Shire Plc (SHP) 2,053.00p +1.28%
Rexam (REX) 533.50p +1.04%
G4S (GFS) 258.70p +1.02%
Smiths Group (SMIN) 1,313.00p +1.00%
Centrica (CNA) 384.40p +0.95%

FTSE 100 - Fallers
Evraz (EVR) 159.90p -5.61%
Fresnillo (FRES) 1,103.00p -4.17%
Anglo American (AAL) 1,519.00p -3.68%
Glencore Xstrata (GLEN) 335.60p -2.81%
Rio Tinto (RIO) 2,921.50p -2.65%
Vedanta Resources (VED) 1,247.00p -2.58%
Capita (CPI) 918.50p -2.55%
Eurasian Natural Resources Corp. (ENRC) 286.30p -2.45%
International Consolidated Airlines Group SA (CDI) (IAG) 264.60p -2.25%
Randgold Resources Ltd. (RRS) 4,960.00p -1.98%

FTSE 250 - Risers
ICAP (IAP) 324.80p +9.21%
Pennon Group (PNN) 699.50p +5.11%
Cranswick (CWK) 1,084.00p +2.65%
TalkTalk Telecom Group (TALK) 220.00p +2.56%
Jardine Lloyd Thompson Group (JLT) 910.50p +2.53%
Wetherspoon (J.D.) (JDW) 620.00p +2.48%
Balfour Beatty (BBY) 221.20p +2.31%
Capital & Counties Properties (CAPC) 335.70p +2.25%
Tullett Prebon (TLPR) 270.60p +2.11%
Synthomer (SYNT) 215.50p +2.04%

FTSE 250 - Fallers
Lonmin (LMI) 265.70p -7.10%
Kazakhmys (KAZ) 353.50p -4.41%
Petropavlovsk (POG) 143.00p -4.09%
Ocado Group (OCDO) 201.70p -3.95%
Ferrexpo (FXPO) 183.20p -3.93%
Hochschild Mining (HOC) 246.40p -3.90%
African Barrick Gold (ABG) 140.50p -3.44%
Betfair Group (BET) 865.00p -3.35%
Bovis Homes Group (BVS) 724.50p -3.01%
Daejan Holdings (DJAN) 3,980.00p -2.45%

FTSE TechMARK - Risers
Xaar (XAR) 625.00p +5.04%
Parity Group (PTY) 34.75p +2.96%
Oxford Biomedica (OXB) 2.15p +2.38%
NCC Group (NCC) 113.00p +2.26%
Wolfson Microelectronics (WLF) 204.25p +1.36%
Vislink (VLK) 32.00p +1.19%
Kofax (KFX) 325.75p +1.16%
Optos (OPTS) 158.00p +1.12%
Skyepharma (SKP) 46.00p +1.10%
Phoenix IT Group (PNX) 140.00p +0.72%

FTSE TechMARK - Fallers
RM (RM.) 72.00p -2.54%
XP Power Ltd. (DI) (XPP) 1,205.00p -2.43%
Torotrak (TRK) 30.00p -2.04%
Vectura Group (VEC) 92.25p -1.86%
CML Microsystems (CML) 415.00p -1.78%
Consort Medical (CSRT) 780.00p -1.02%
Ricardo (RCDO) 382.00p -0.78%
Innovation Group (TIG) 26.75p 0.00%
Triad Group (TRD) 6.50p 0.00%
Antisoma (ASM) 1.80p 0.00%

Email this article to a friend

or share it with one of these popular networks:

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