27/07/2005 05:16
By Steve Slater
LONDON (Reuters) - Top shares fell on Tuesday to halt a four day winning run, dragged lower by declines in news and information group Reuters and
in oil titan BP as costs related to a Texas refinery blast took the shine off bumper profits.
Shares in Reuters fell 7.4 percent after the company said costs associated with investing in new growth initiatives would reduce trading profit by about
70 million pounds in 2006 and 2007. Dealers said there was disappointment that investment costs would weigh on profit until 2008.
In contrast, publisher Yell rallied 4.7 percent to top the FTSE leaderboard after a 12 percent rise in quarterly turnover highlighted its healthy pace of
growth and pushed worries about a regulatory probe into the background.
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"Yell remains one of the fastest organic revenue growth stories in the sector, yet is not expensive. That partially discounts UK regulatory uncertainty and
undervalues the U.S. growth story in our view," Merrill Lynch said, repeating its "buy" stance.
The FTSE 100 share index <.FTSE> closed down 14.5 points, or 0.3 percent, at 5,256.2, after its four-day rise had lifted the index back to near its highest level
since March 2002. But dealers said the advance ran out of steam, and volume was a modest 2.2 billion shares.
"A day like today reflects a degree of profit-taking and a bit of caution, but you get the feeling if there is a shake out there buyers are ready to step in," said John
Smith, investment director at fund manager Brown Shipley.
Telecom stocks were in demand, however, with mobile giant Vodafone up 2.4 percent as analysts reacted positively to Monday’s subscriber figures
showing the company had its best growth for five years, with Nomura upgrading the stock to "buy" from "sell".
Cable & Wireless jumped 3.6 percent after hitting its highest level for almost 3 years as investors warmed to the prospect it could buy UK rival Energis,
adding to the upbeat sector mood. Energis would cost about 700 million pounds but dealers said it would be a positive step in the consolidation among the
alternative telecoms operators, and show C&W is on the road to recovery.
BP SLIDES, REXAM SHINES
Oil stocks were the main drag after BP’s second-quarter profits surged on the back of record oil prices, but a near $1 billion (574 million pound) hit from a fatal
blast at its Texas City refinery dashed expectations of a record result.
BP also said it would have to spend an extra $500 million to meet existing investment plans in 2005 and that the start-up of its flagship Thunder Horse platform in
the Gulf of Mexico would be delayed, helping send its shares 2 percent lower after a strong recent run and alone taking 11 points off the FTSE’s value.
But drinks can maker Rexam provided some fizz on the day it delivered its 10 billionth can to energy drink firm Red Bull, with its shares rising 1.4
percent to 488-1/2 pence as Dresdner Kleinwort Wasserstein lifted its target on the shares to 565p from 500p and Cazenove said the company could announce a
special dividend next month.
Wealth manager St James’s Place Capital led mid-caps with a 7.3 percent rally after posting a first-half profit near the top of analysts’ forecasts and
saying the second quarter of the year was its best ever for new business. The results prompted Dresdner to lift its rating on the shares to "buy" from "add".
Results from Britain’s largest listed insurance broker Jardine Lloyd Thompson were not as sparkling, but its shares rebounded from an early fall and
were up 7.2 percent on the back of comments it is winning new business.
But mid-cap engineer Charter fell 3.8 percent, unsettled by a report that a U.S. court case development could pave the way for lawsuits against the
welding materials industry. One of Charter’s two core businesses is Esab, which it says is the world market leader in welding and cutting.
Additional reporting by Louise Heavens and Friedel Rother
