Fresh banking concerns cool September rally

Markets on both sides of the Atlantic were slightly lower today as fresh concerns about the European banking system cooled the September rally.

Wall Street’s Dow Jones Industrial Average slipped 0.1% in early trading, after Moody’s Investor Service downgraded the debt of Anglo Irish Bank, renewing concerns about the health of the European banking system.

The London market was given an initial boost in quiet trading after Unilever announced a £2.3bn (€2.7m) deal to buy American haircare firm Alberto Culver, but lost earlier gains and slipped 21 points lower at 5576.

But with little in way of economic and corporate news, investors in the US and UK were keeping a close eye on broker recommendations and corporate dealmaking.

In the United States, Southwest Airlines jumped 2.9% after announcing it will buy AirTrain Holdings, and Asda-owner Wal-Mart Stores slipped 0.2% after making a proposal to buy South African Massmart Holdings.

In the London markets, Smiths Group sunk to the bottom of the Footsie, with shares off 3% or 33p to 1941p, after BofA-Merrill Lynch Global Research lowered its recommendation for the world’s biggest maker of airport scanners. The company is due to post full-year figures later this week.

In today’s corporate results, shares in building supplies firm Wolseley added to pressure on the wider market after it announced a modest 1% rise in annual trading profits and highlighted an uncertain outlook for core markets in the United States and UK.

The group also revealed it would switch its tax base from the UK to Switzerland in a move set to save the company around £23 million a year. Shares were down 11p to 1519p.

HSBC slipped as investors digested developments on Friday evening when the bank confirmed the departure of chief executive Michael Geoghegan at the end of the year.

After a week of speculation over boardroom bust-ups and rumours surrounding Mr Geoghegan’s exit from the firm, the banking giant confirmed finance boss Douglas Flint as chairman and Stuart Gulliver as the new chief executive. Shares were down 5p at 661.3p.

Goldman Sachs hiked target prices in certain mining stocks, seeing a boost to the sector, with a number of companies fronting up the risers board. Kazakhmys was up 22p at 1443p, Antofagasta was ahead 15p at 1196p and Vedanta Resources advanced 14p to 2295p.

Leisure services group Whitbread also received a boost from an upgrade by Credit Suisse. Shares were up 10p to 1638p.

Outside the top flight, the Unilever deal was mirrored in the FTSE 250 Index by Imperial Leather owner PZ Cussons following its acquisition of tanning firm St Tropez. The £62m (€73m) purchase helped the PZ Cussons share price to rise 3.1p to 367.9p.

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