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FTSE slips as Shell results disappoint

Published 02/03/2011, 04:26 AM
Updated 02/03/2011, 04:28 AM
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* FTSE 100 down 0.5 percent

* Shell, Vodafone fall after results

* BT Group gains after Q3 profit rises

By Simon Falush

LONDON, Feb 3 (Reuters) - Disappointing results from oil major Royal Dutch Shell dragged Britain's top share index lower on Thursday, though BT Group helped limit the losses with a sharp gain after its core profit rose.

By 0906 GMT the FTSE 100 was down 31.43 points, or 0.5 percent, at 5,968.64 after it closed up 42.25 points or 0.7 percent on Wednesday, at 6,000.07 points, driven by strong gains from banks and miners.

Index heavyweight Shell took 15 points off the index after a rise in net profit fell short of market expectations.

The results weighed on sentiment in the sector despite a firmer crude price, with BG Group down 2.2 percent and BP losing 0.6 percent.

Mobile phone giant Vodafone also weighed on the index, down 0.9 percent as a rise in third-quarter revenues failed to inspire investors, with brokers saying it was fully valued.

However a 7 percent increase in third-quarter core profits lifted BT Group shares 3 percent, making it the top riser on the blue-chip index.

"Results have generally speaking been beating expectations, but there is a fragility of sentiment driven by uncertainty in Europe, China and in Egypt, and in the current environment investors are looking to book short-term gains," said Richard Hunter, head of equities at Hargreaves Lansdown.

Highlighting geopolitical risks, clashes again overnight between Egyptian President Hosni Mubarak's supporters and demonstrators became increasingly violent.

Brent crude oil futures approached $103 a barrel as Mubarak's supporters opened fire on protesters in Cairo.

Gold fell on economic optimism, pushing precious metal miners Fresnillo and Randgold Resources down 2.1 and 1.8 percent, respectively.

Chip designer ARM Holdings added 1.5 percent as Investec made "significant" upgrades to its earnings forecasts and ramped up its target price to 503 pence from 360 pence.

Data could give the market a lift, traders said. The Markit/CIPS January services PMI report is due at 0928 GMT.

"In the UK, traders are expecting a stronger-than-forecast figure for Services PMI after yesterday's surge in construction PMI," said Jonathan Sudaria, dealer at Londong Capital Group.

"Also, traders are increasingly bullish ahead of U.S. unemployment and ISM Non-manufacturing data, whose expectations have been lifted following on from forecast-beating data earlier in the week."

The latest U.S. weekly jobless claims numbers will be released at 1330 GMT, providing another snapshot of the employment picture across the Atlantic ahead of Friday's key January U.S. jobs report.

January's U.S. ISM non-manufacturing report, together with January revised durable goods orders and December factory orders, will be released at 1500 GMT. (Editing by Will Waterman)

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