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Sunday 27th of February 2011
February 22, 2011    

BAE Systems drops on report hinting at cancelled defense projects

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by Elaine Frei
BAE Systems drops on report hinting at cancelled defense projects

European equities markets were lower Tuesday as civil unrest continued in Libya with Libyan leader Muammar Qaddafi insisting that he won’t resign as demonstrators are demanding.

The violence in Libya, which holds the biggest oil reserves in North Africa, has sent oil prices soaring, which is causing concerns that economic recovery will be hampered and that corporate earnings will be hurt.

The FTSE 100 was down 0.3 percent to 5,996.76 in London, while the FTSE 250 dropped 0.64 percent to 11,652.4.

Defense and aerospace contractor BAE Systems (LSE: BA) was 4.3 percent lower, leading declines on the 100, on a UK parliamentary report that some defense projects could be cancelled or renegotiated after hints that there has been overspending on some existing projects.

The biggest loser on the 250, meanwhile, was online grocery retailer Ocado Group (LSE: OCDO),w hich fell 6.35 percent.

Most miners were lower, led by Kenmare Resources with a drop of 4.1 percent, although there were 7 gainers in the sector, led by Hochschild Mining (LSE: HOC), which added 2.42 percent, while BHP Billiton (LSE: BLT) and African Barrick Gold (LSE: ABG) each placed among the top five gainers on the 100, adding 1.62 percent and 1.5 percent respectively.

The energy sector was mixed, with oil rig builder and refurbisher Lamprell (LSE: LAM) up 8.93 percent for the best results in the sector, while Heritage Oil (LSE: HOIL) fell the most, dropping 1.65 percent.

Most utilities were lower, led by electricity generator International Power (LSE: IPR), which was down 2.98 percent.

Most banks were lower, led by HSBC Holdings (LSE: HSBA) with a decline of 0.77 percent, but Royal Bank of Scotland Group (LSE: RBS) added 2.32 percent to turn in the best performance on the 100.

Chemicals group Croda International (LSE; CRDA), which makes sunblock ingredients for Proctor & Gamble (NYSE: PG), was the biggest gainer on the 250, adding 9.71 percent after P&G reported fiscal fourth quarter operating profits above analyst expectations.

The FTSE Eurofirst 300 was down 0.5 percent to 1,165.57 while the Dax fell 0.05 percent to 7,318.35, the IBEX was 1 percent lower to 10,701.9 and the CAC-40 dropped 1.15 percent to 4,050.27.

Markets in the Asia-Pacific region were lower on the continuing unrest in the Middle East and North Africa after violence mounted in Libya.

The Nikkei 225 fell 1.78 percent to 10,664.7 in Tokyo, while the Topix index was down 1.84 percent to 956.7 and the Mothers market dropped 2.16 percent to 501.19, with declines coming after Moody’s Investors Service cut the nation’s credit rating from “stable” to “negative”, saying that the Japanese government has not done enough to deal with its debt.

Banks were lower, with Mitsubishi UFJ (TYO: 8306) down 3.6 percent while Sumitomo Mitsui Financial Group (TYO: 8316) dropped 4.5 percent.

Shippers were also lower as shipping fees dropped, sending Nippon Yusen (TYOP 9101) down 2.8 percent while Kawasaki Kisen Kaisha (TYO: 9107) was 3.2 percent lower and Mitsui OSK Lines (TYO: 9104) dropped 3.2 percent.

India’s Sensex was down 0.77 percent to 18,296.2, while in Australia the Sydney Ordinaries dropped 0.87 percent to 4,947.3 and the S&P/ASX200 fell 0.88 percent to 4,856.7.

The Straits Times Index was 1.68 percent lower to 3,019.12 in Singapore, South Korea’s Kospi fell 1.76 percent to 1,969.92, the Taiex was down 1.87 percent to 8,673.67, Hong Kong’s Hang Seng was 2.11 percent lower to 22,990.8 and the Shanghai Composite dropped 2.62 percent to 2,855.52.

New York equities markets were lower in early afternoon trade, with the Dow Jones Industrial Average down 1.31 percent to 12,228.4 while the S&P 500 had dropped 1.85 percent to 1,318.22 and the Nasdaq Composite was 2.43 percent lower to 2,765.05.

Crude oil prices were up significantly in midday trade in New York on the unrest in OPEC member nation Libya, with March contracts for West Texas Intermediate up $4.95 to $91.15 per barrel, closing in on a 6 percent gain on the session, while Brent crude was up a more modest 43 cents to $106.17 per barrel.

Metals prices were mixed, with gold and silver higher, but copper was 13 cents lower in midday trade in New York, to $4.36 per pound.

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