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Monday 31st of January 2011
January 28, 2011    

Diageo, TUI Travel decline on broker downgrades

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by Elaine Frei
Diageo, TUI Travel decline on broker downgrades

European equities markets were lower to end the week on concerns about civil unrest in Egypt, usually seen as a moderating influence in the Middle East.

The FTSE 100 was down 1.4 percent to 5,881.37 in London, while the FTSE 250 fell 0.61 percent to 11,546, after a report showed that consumer confidence in the UK weakened in January to its lowest point in nearly two hears, and after the gross domestic product in the United States did not grow as much as expected in the fourth quarter.

Broker downgrades drove some of the losses in London as distiller Diageo dropped 1.93 percent on a downgrade from “neutral” to “underweight”, while in the travel and leisure sector TUI Travel (LSE: TT) was down 4.45 percent to lead declines in a mixed sector after Natixis dropped its rating from “buy” to “neutral”.

Online gambler PartyGaming (LSE: PRTY) led gains in the travel and leisure sector, adding 5.81 percent, while car rental agent Avis Europe (LSE: AVE) was up 3.14 percent.

The best performer on the 100 was satellite communications group Inmarsat (LSE: ISAT), with a gain of 2.4 percent, while Essar Energy (LSE: ESSR) dropped 5.62 percent for the worst day on the 100.

BG Group (LSE: BG) was lower on the political problems in Egypt, where it recovers over 35 percent of the natural gas produced, falling 4.17 percent.

The biggest decline on the 250 came from the pharmaceuticals sector, where BTG (LSE: BGC) dropped 5.74 percent.

Most miners were lower, led by a 4.54 percent decline by Vedanta Resources (LSE: VED), while iron ore miner Ferrexpo (LSE: FXPO) added 2.94 percent to lead 4 gainers in the sector.

Homebuilders were lower, led by Barratt Developments (LSE: BDEV), which was down 4.96 percent, while Bellway (LSE: BWY) was 4.55 lower percent and Redrow (LSE: BDW) dropped 4.2 percent.

The FTSE Eurofirst 300 was down 0.84 percent to 1,144.89 while the Dax fell 0.74 percent to 7,102.8, the IBEX was 0.75 percent lower to 10,747 and the CAC-40 dropped 1.41 percent to 4,002.32.

Markets were mixed in the Asia-Pacific region, as more declined than saw gains.

The Nikkei 225 was 1.13 percent lower to 10,360.3 in Tokyo, while the Topix index fell 1.07 percent to 919.69 but the Mothers market gained 2.37 percent to 470.94.

The declines were a reaction to yesterday’s move by Standard & Poor’s to cut Japan’s credit rating to AA minus, as well as in disappointment at some earnings reports and on movies by brokers.

Camera and copier maker Canon (TYO: 7751) was down 3.1 percent after it said operating profits did not reach projections, and after Nomura Holdings cut the company’s target share price.

Chip-making equipment manufacturer Advantest (TYO: 6857) was 7.4 percent lower after Goldman Sachs cut its target share price.

Banks were down as well, with Mizuho Financial Group (TYO: 8411) down 1.2 percent, while Sumitomo Mitsui Financial Group (TYO: 8316) fell 1.6 percent and Mitsubishi UFJ (TYO: 8306) dropped 2.7 percent.

Other decliners in the region included the Kospi, which was down 0.34 percent to 2,107.87 in South Korea, while Hong Kong’s Hang Seng fell 0.68 percent to 23,617.

In Australia, the S&P/ASX200 was 0.65 percent lower to 4,774.9 and the Sydney Ordinaries dropped 0.7 percent to 4,872.5, while India’s Sensex fell 1.54 percent to 18,396.

The Shanghai Composite managed a gain of 0.13 percent to 2,752.75, while the Straits Times Index added 0.31 percent to 3,229.69 in Singapore and Taiwan’s Taiex gained 0.47 percent to 9,145.35.

New York markets were lower in midday trade, with the Dow Jones Industrial Average down 1.11 percent to 11,856.5 while at the same time the S&P 500 had dropped 1.35 percent to 1,282.06 and the Nasdaq Composite was 2.14 percent lower to 2,696.22.

Crude oil prices rose significantly, with March contracts for West Texas Intermediate crude up $3.63 to $89.27 per barrel on the New York Mercantile Exchange while Brent crude had added $1.75 to $99.14 per barrel on the ICE Futures Europe exchange in London.

The gains came on fears that political strife in Egypt could spread throughout the oil producing areas of the Middle East after Cairo protests turned violent.

Meanwhile, metals prices were also higher, with gold up $21.30 to $1,341.10 per troy ounce in New York trade as investors looked for safe places to put their cash as they worried about developments in Egypt.

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