FTSE Cuts Losses

An oil price rise late in the session helped London stocks stage a modest recovery from early losses that had knocked investors returning from their three-day weekend break.

Down 1.6 per cent at the open, the FTSE 100 crept modestly higher in the afternoon, although a crop of forecast-beating results and bid activity failed to lift the market into positive territory. By the close it had receded 34.9 points, or 0.63 per cent , at 5470 and the mid-cap FTSE 250 was down 0.53 per cent to 9133.6.

On the corporate activity front, Liberty International climbed 5.3 per cent to 995p after stake-building by two of the biggest companies in the sector sparked speculation of a bidding war for the London property company.

US property investor Simon Property Group raised its stake to 4.22 per cent. Earlier, Australia’s Westfield Group, the world’s biggest retail property developer, confirmed speculation that it had built up a stake. Westfield said the holding of 2.96 per cent was acquired for investment purposes”.

Disappointment greeted Imperial Energy’s announcement that it was finalising a £1.4bn offer from India’s ONGC Videsh. The oil explorer’s shares fell 2 per cent to £12.14, however, as the cash offer of £12.50 a share came down from an initial approach at £12.90 a share due to falling oil prices.

Trouble continued to stack up for housebuilders and building materials groups after Bovis Homes experienced the toughest period of trading in its life as a public company”. First-half pre-tax profit slumped as the company lowered prices to maximise sales. Cumulative sales to August 22 were down more than 1,000 units from a year ago to 1,574.

But the sector made a dramatic u-turn after a report in Building magazine suggested Taylor Wimpey had reached a deal to relax banking covenants with its lenders, without the need to raise fresh capital.

Elsewhere in the sector, shares retreated as China copper prices and other metals fell amid renewed concerns about Chinese demand. Ferrexpo, the Ukrainian iron ore producer, lost 8.8 per cent to 244¾p ahead of results on Thursday.

FTSE Cuts Losses

TradingEconomics.com, Financial Times
8/26/2008 10:28:00 AM