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Britain's FTSE falls as big stocks go ex-dividend

Published 02/09/2011, 04:43 AM
Updated 02/09/2011, 04:48 AM

* FTSE 100 index down 0.3 percent

* Ex-dividend factors knock over 19 points off index

* Reckitt Benckiser drops as Q4 results miss forecasts

LONDON, Feb 9 (Reuters) - Britain's top share index fell in early trade on Wednesday, weighed down by some heavyweight stocks trading ex-dividend and disappointing results from household products group Reckitt Benckiser.

At 0900 GMT, the FTSE 100 index was down 15.60 points, or 0.3 percent at 6,075.73, having gained 0.7 percent on Tuesday to close at its best level since May 2008.

"After Tuesday's leap to multi-year highs, a bit of a hangover today is inevitable, though without the ex-dividend factors the FTSE would be higher," said Ben Barty-King, head of Options trading at ETX Capital.

Companies trading ex-dividend knocked 19.83 points off the FTSE 100 index on Wednesday, with heavyweight's BP, GlaxoSmithKline, Royal Dutch Shell, Unilever, International Power, and Sage Group all losing their payout attractions.

Household products giant Reckitt Benckiser was the top FTSE 100 faller, down 3.7 percent after the firm posted fourth-quarter earnings that missed forecasts.

"A Q4 margin miss and cautious guidance testify in our view to the gross margin pressures now afflicting both Reckitt and the wider Foods & HPC sector," Investec analysts said in a note.

Miners were weak as a sector, led by Kazakhmys which was down 2.5 percent. Falls in metal prices in Asia in response to China's rate hike put the sector into reverse after a late rally on Tuesday.

Rio Tinto shed 0.4 percent. CSN, Brazil's largest diversified steelmaking group, has raised its stake in Australian miner Riversdale which is subject to a $3.9 billion takeover bid from Rio Tinto.

BANKS WANTED

Banks provided the main underlying strength for blue chips, led by Lloyds Banking Group up 1.1 percent, extending gains made on Tuesday as the sector took a sanguine view of the British government's move to impose the full amount of a planned levy on bank balance sheets this year.

"It shows the strength of the recovery by the banks if the government feels they can pay-up this extra tax," said ETX Capital's Barty-King.

Insurers also gained led by Prudential, up 2.3 percent as Societe Generale upgraded for the stock to "buy".

Pru replaces Aviva, down 1.1 percent, as the broker's preferred stock in the sector. It downgraded Aviva to "neutral".

On the second line, London Stock Exchange was a strong performer, up 8.7 percent after the exchange said it was in advanced talks to take over the owner of the Toronto Stock Exchange

British macroeconomic data offered some cause for optimism about growth for the UK economy.

Britain's economy will rebound strongly in the first quarter from the shock decline at the end of last year, according to the CBI business lobby group, but it said growth would likely be slower in the rest of the year.

British shop price inflation rose to 2.5 percent in January after higher commodity costs pushed up food bills, a survey from the British Retail Consortium showed Wednesday.

(Editing by Jane Merriman)

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