The FTSE retreated from a 12-month high this morning following weakness in banks and energy majors.
Barclays share price took a bit of a battering this morning after a Qatari sovereign wealth fund confirmed that it is selling half of the warrants it holds in the bank.
The wealth fund said it is selling 379.22 million shares in Barclays by converting it’s the warrants in holds in the bank, worth over £1.3 billion. An article on the FT suggested that the Qatari’s could be selling their stake in Barclays and using some of the sale proceeds to acquire Sainsbury.
Reports released last week speculated that the J Sainsbury family have accepted to sell the grocer to the Qatari’s at a price equivalent to 420p a share.
Barclays shares plunged 4.7% to 364p this morning while Sainsbury’s shares gained 4% to 343.5p, giving the grocer a market value of over £6 billion.
Meanwhile, rival bank HSBC fell 0.9% to 703.4p and Royal Bank of Scotland slid 1.3% to 46.32p. In contrast, Lloyds Banking Group edged 0.1% higher to 92.13p after unveiling plans to sell its Bank of Scotland portfolio management services business, as well as two other client portfolios under Lloyds TSB Private Banking, to Rathbone Brothers for up to £35.4 million.
Energy majors were also under pressure, despite crude oil briefly touching $80 a barrel. Cairn Energy and Tullow Oil were the sector’s worst performers, down 1.8% to 2943p and 1% to 1232p respectively. BP edged 0.7% lower to 570.3p.
Meanwhile, AIM-listed oil and gas exploration company Sterling Energy advanced 3.1% to 5p a share after announcing plans to sell its US business for $90 million and use the proceeds to repay debt.
Blue-chip mining companies were mixed this morning, with Xstrata falling 0.9% to 1018p, despite announcing that its financial position remained strong following a positive third quarter.
The world’s largest coal exporter unveiled a 9% rise in third-quarter coal production and 10% increase in zinc production. The retreat in its share price was due to the fact that copper production, its second most profitable resource, plunged 10% over the review period. Xstrata also failed to provide the market with its outlook for commodities.
Other mining sector losers included: Lonmin, which fell 1.6% to 1695p and Vedanta Resources, which declined 0.2% to 2384p. Bucking the negative trend, however, was Rio Tinto, advancing 1.1% to 3004p and Kazakhmys, which climbed 1.3% to 1318p.
Domestic corporate news may have also contributed to the negative sentiment on the FTSE - shares of blue-chip software company Autonomy plunged 6.2% to 1496p after it unveiled disappointing third-quarter results.
Lower down the market, shares of auto dealer Inchcape rallied 5.3% to 34.62p after it lifted its full-year guidance on the back of lower-than-expected finance costs. By 10:30am (London time) the FTSE 100 Index was 10.63 points (-0.20%) lower at 5270.91 while the broader FTSE 250 was 23.76 points (-0.25%) below its previous close at 9522.88.
In the meantime, December Dow and S&P 500 futures ticked 0.14% higher, suggesting the market currently expects Wall Street to open higher this afternoon – perhaps on the back of Apple’s encouraging quarterly results, released after the closing bell last night.
Looking ahead to this afternoon, US housing starts, building permits and producer prices are scheduled for release at 1:30pm (London time). The American Petroleum Institute will also release its crude oil inventories at 9:30pm.
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