FTSE retreats from nine-week high after weak company results
By Tricia Wright
LONDON (Reuters) - Britain's top share index retreated from a nine-week high on Tuesday, knocked by weak results from Barclays and Aberdeen Asset Management, while falls in drugmakers also took their toll on the market.
The blue-chip FTSE 100 index closed down 23.86 points, or 0.4 percent, at 6,798.56 points, after hitting 6,838.17 on Friday, its highest level since late February. The market was closed on Monday for a public holiday.
Barclays shed 5.2 percent, the top FTSE 100 faller, after saying a collapse in investment bank revenue had hit first-quarter profit and was still hurting income in April. That threw a spotlight onto an overhaul of the flagging business due to be unveiled by the British bank on Thursday.
Investment manager Aberdeen Asset Management dropped 2.4 percent on a forecast-lagging 3 percent fall in pretax profit after clients pulled money out of its core emerging market and Asian equity funds.
"Reporting seasons are now more important than they have been for many years because the market is at a valuation level where some earnings growth is priced in. When they miss earnings, it does matter to the market now," Macquarie strategist Daniel McCormack said.
"On a 12- to 18-month view, there is plenty of upside left in the market because earnings will start to improve, but I struggle to see a near-term positive catalyst for the market to push materially higher."
The pharmaceutical sector was the second biggest drag on the FTSE 100 - behind banks - after investors who had bet that Pfizer would step up its efforts to seal a takeover of AstraZeneca were disappointed, traders said.
AstraZeneca has rebuffed three approaches from Pfizer. It said on Friday that the U.S. firm's latest offer of 50 pounds a share undervalued the company "substantially".
"There's a perception that the markets have priced Pfizer getting in and doing the deal, and it's probably going to take a little bit longer than investors had anticipated. So you've got a little bit of profit-taking in AstraZeneca's shares," CMC Markets senior market analyst Michael Hewson said.
AstraZeneca, up some 25 percent since mid-April on expectations of a Pfizer deal alongside a burst of other pharma deal-making, fell 2.7 percent to 4,677.5 pence. Shire, which has risen almost 20 percent over the period, slipped 3.1 percent.
BUILDERS BUOYANT
Housebuilders limited market losses, reversing recent falls, with traders citing a bullish trading update from Countrywide, Britain's largest estate agency.
The Thomson Reuters UK Homebuilding index has fallen more than 10 percent from a late February peak, trimming its gains for 2014 to around 4 percent.
It doubled in value during the past three years, underpinned by tight supply and UK initiatives to spur the job-intensive sector, such as the 'Help-to-Buy' mortgage scheme.
Barclays said the recent selloff had left attractive valuations.
"We see strong fundamentals: greater visibility provided by the extension to the 'Help-to-Buy' scheme; a largely disciplined land market; and a more supportive planning system," Barclays said in a note.
"Where headwinds exist, notably the threat of rising interest rates, they remain relatively benign in our view."
Persimmon topped the FTSE 100 leader board, up 3.8 percent at 1,378 pence as Barclays lifted its target price for the stock to 1,540 pence from 1,333.6 pence. Blue-chip peer Barratt Developments rose 1.9 percent, and mid-cap Taylor Wimpey climbed 1.8 percent.
(Additional reporting by Atul Prakash; Editing by Ruth Pitchford)
