Gloomy updates and downgrades weigh down FTSE

London shares eased today despite hopes of modest gains on Wall Street later this afternoon.

London shares eased today despite hopes of modest gains on Wall Street later this afternoon.

The US markets are expected to be subdued over the next few days because of Thursday’s Thanksgiving break.

Tom Hougaard of City Index said: “This week always sees lighter volume than usual and Friday is historically the lightest volume day of the year in the US.”

Ahead of that, however, City traders were expecting Wall Street to gain this afternoon after a dip into the red on Friday.

But it was not enough to lift the mood in London and by lunchtime the FTSE 100 Index, which last week gained 2.2%, was off 32.1 points at 4143.1.

A gloomy update by engineering group GKN and a stockbroker downgrade on insurer Royal & Sun Alliance were dampening spirits.

GKN was one of the biggest losers after warning tough conditions in the automotive and aerospace markets would put pressure on next year’s performance.

Shares fell 9.75p to 215.75p, a 4% drop, but beating it to the top of the FTSE 100 fallers’ board was Royal & Sun Alliance.

It fell 7.75p at 133.25p as City bank Schroder Salomon Smith Barney cut its price target on the group to 100p.

A number of other financial stocks were also weighing on the market.

R&SA rival Legal & General was off 4.25p at 114p, fund manager Amvescap shed 14p at 457p while Old Mutual fell 2.5p to 92.25p.

It said second-half earnings were so far satisfactory even though weak equity markets meant they were down on the first six months.

Among the banks, Lloyds TSB lost 18.5p at 547.5p, Barclays shed 8.5p at 459.25p and Abbey National drifted 22.5p to 645.5p.

Reports over the weekend reiterated growing speculation in the market that Abbey is gearing up to cut dividend payments.

On a quiet day for corporate news Imperial Tobacco reported full-year results at the top end of expectations but the subdued mood saw it ease 16p to 956p.

However, industrial services firm Brambles recovered some of the ground lost after last week’s shock profits warning, rising 3.5p to 134.25p.

The Anglo-Australian company dived 34% on Thursday after the warning but said today it would weather the downturn and return to strong growth within the next three years.

Retailers were also edging ahead, with fashion chain Next up 11.5p at 842p, B&Q-to-Comet group Kingfisher adding 3p at 241p and electrical chain Dixons ahead a penny at 192p.

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