Home Retail Group on course for FTSE relegation

Argos and Homebase owner Home Retail Group is set to lose its blue-chip status when the latest quarterly review of the FTSE 100 Index takes place next week.

The ’yo-yo’ company has bounced between the FTSE 100 and 250 in recent years but its latest stay in the top flight since December 2008 looks set to come to an end.

Its shares have slipped by more than 25% since the beginning of May after a dismal first quarter trading update as consumers reined in spending in the run-up to the election.

Although the final moves will be based on Tuesday’s closing prices and not confirmed until Wednesday, the two other Footsie stocks likely to fall into the FTSE 250 are telecoms firm Cable & Wireless Worldwide – subject of takeover gossip this week – and Invensys, which provides technology and software to oil refineries and power stations.

These are likely to be replaced by Glasgow engineering firm Weir Group, and Resolution, the investment vehicle of insurance guru Clive Cowdery which owns Friends Provident and recently bought Axa’s UK life business.

Engineering group Tomkins will also enjoy a temporary spell in the top flight after agreeing a £2.9bn takeover this week.

Online grocer Ocado is set to join the FTSE 250 after its float last month - despite cutting the value of its share offering – although the biggest casualty in the FTSE 250 will be troubled social housing firm Connaught.

The company has seen shares tumble more than 90% since a profit warning over spending cuts at the end of June – leaving it with a market value of just £24m.

Other currently set to be relegated to the small cap ranks include renewable energy firm Eaga, educational whiteboards maker Promethean World, diamond producer Gem Diamonds and video games and consoles retailer Game Group.

These are likely to be replaced by companies including chemicals firm Elementis and car hire business Avis Europe.

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