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FTSE slips as commodity stocks retreat, BT gains

Published 10/15/2010, 12:15 PM
Updated 10/15/2010, 12:20 PM
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* FTSE down 0.4 percent

* Old Mutual slides as HSBC pulls out of Nedbank bid

* Life insurers weighed by Citigroup note

* BT gains as spending cut fears fade

By Simon Falush

LONDON, Oct 15 (Reuters) - Commodity stocks fell, hurt by disappointing results from General Electric and weak U.S. data, and pulled Britain's top shares lower at the close on Friday.

The FTSE 100 ended down 23.84 points at 5,703.37. It closed 0.4 percent lower on Thursday.

Energy stocks were the biggest drag on the index, pressured as crude retreated slightly, with BP down 1 percent while Cairn Energy lost 2.6 percent.

GE revenues came in below forecasts, overshadowing a speech from Federal Reserve Chairman Ben Bernanke which pointed to a fresh bout of money printing in the United States.

Analysts said that Bernanke's comments had little impact because they were no surprise.

"The comments were fully expected and equity markets have already risen sharply since (the second bout of quantitative easing) was flagged," said Jim Wood-Smith, head of research at Williams de Broe.

Also pressuring equities, U.S. consumer sentiment unexpectedly dipped in early October to its weakest level since July, with buying plans on the decline, a survey released on Friday showed.

A technical indicator suggested that the index looked overbought, Wood-Smith said.

"The 14-day relative strength index is at around 70 which is fairly rare and a good short term indicator that an index is stretched."

The FTSE 100 is up around 9 percent since the start of September.

Miners which are sitting on sharp gains since the start of September retreated. Xstrata and Kazakhmys both fell 2.3 percent.

INSURERS SAG, BT BOUNCES

Old Mutual was the sharpest faller, down 4.8 percent after HSBC ended talks to pay the insurer $8 billion for a majority stake in South African lender Nedbank.

Sector peers were also under pressure as Citigroup downgraded the UK life insurance sector to "underweight" from "neutral" in a strategy note, with Standard Life and Legal and General, off 3.2 and 1 percent, respectively.

BT Group was the star performer on the blue-chip index, up 2.9 percent the after telecoms provider said it had managed to retain contracts with the British government.

The shares had fallen earlier in the week after a review of government spending by retail tycoon Philip Green found fixed-line telecoms were the "best example of where the government fails to leverage its scale".

Elsewhere, aircraft engine maker Rolls-Royce rose 1.1 percent after Goldman Sachs upgraded the firm to "buy" from "neutral".

Mid cap Belgium-based gearbox maker Hansen Transmissions jumped 8.1 percent after it received a 75 million-euro offer for its industrial gearbox unit from Japan's Sumitomo Heavy Industries, and planned to focus solely on wind energy.

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