FTSE 100 struggles for momentum
Monday 19th August 2013, 12:21PM BST.
London’s blue-chip shares continued on the downward slope today as investors fought shy of returning to the market following a second successive week of losses on the top-flight index.
Anxiety that quantitative easing in the United States will begin to be tapered off from next month has prompted selling on Wall Street and in the City.
There was little change in sentiment today, with the FTSE 100 Index falling again, though the decline of 12.9 points to 6487 was much less dramatic than that seen at times last week.
European markets were also down with a fall in Germany’s Dax on a similar level to that seen in London, and France’s Cac 40 sliding more sharply by more than 0.5%.
This was despite better prospects on the continent, with the eurozone coming out of recession last week.
Craig Erlam, market analyst at Alpari, said: “The markets appear to be lacking any real direction at the moment, as improving data out of Europe continues to be overshadowed by increasing expectations that the Fed will begin winding down its asset purchase programme in September.”
Mining stocks led the London sell-off as Anglo American declined nearly 3%, or 44p, to 1503.5p and silver miner Fresnillo dropped 17p to 1155p.
Commodities trader Glencore Xstrata was the biggest top flight faller on expectations that it will write off up to £4.5 billion from the value of assets at Xstrata. Shares dropped 5.4p to 302.9p, ahead of results tomorrow.
Today’s weaker market sentiment came despite signs of a pick-up in deal activity.
Nasdaq-listed vacuum products specialist Edwards, which is based in Crawley and employs 3,200 people, is to be bought by Swedish firm Atlas Copco in a £1 billion deal.
And oil and gas engineering firm Kentz said it was the subject of takeover interest from two parties, Amec and Germany’s M+W.
Kentz rejected Amec’s latest approach, which valued it at between £673 million and £691 million, after turning down another attempt last month. It also spurned an approach from Stuttgart-based M+W, which it said was worth less than Amec’s.
The developments fuelled a rise in Kentz’s share price of 22%, or 106.6p, to 582.5p. Amec was 7p lower at 1077p.
Meanwhile drug maker Shire topped the FTSE 100 climbers board on reports that it had hired investment bank Lazards to bolster its bid defences amid rumours of a takeover attempt by a US rival. Shares were up 2%, or 50p, to 2435p.