FTSE slides on Vodafone and BG Group falls

Emerging market fears rattle investors as two stocks wipe 50 points off the FTSE 100

London’s leaderboard slid for a fifth consecutive trading session, with worries over emerging markets that rattled the markets last week having failed to abate after the weekend.

After toppling than 100 points on Friday as Argentina’s peso collapsed and the Turkish lira sank to a record low, London woke up to continued woes as Japan revealed a record trade deficit, concerns mounted over China’s growth, the possibility of further Fed tapering sank in and the effects of political risk in Ukraine and Thailand weighed.

About 70pc of FTSE 100 companies’ revenues are made overseas, reflecting the City’s exposure to foreign markets. As a result, the London market yesterday underperformed its European peers.

The FTSE 100 closed down 99.39 points or 1.7pc at 6564.95, although about 50 points of the session’s fall were caused by just two stocks tumbling: Vodafone and BG Group (LSE: BG.L – news) .

In comparison, France’s CAC 40 fell by 0.4pc to 4144.5 points, Germany’s DAX slipped 0.46pc to 9349.2 points and Spain’s IBEX shed 1.12pc to 9758.40 points .

Oil and gas company BG Group led the blue-chips lower after it said that gas production would be as much as 11pc below expectations for this year and next. The group’s shares tumbled by 173p, or 13.78pc, to £10.82 after the company announced the Egyptian government was using more gas for its domestic market, leaving less to export. The disappointment is the latest in a series for BG investors as the group has cut its output forecasts three times over the past 18 months.

Vodafone also took a battering on the exchange, falling 9, or 3.87pc, to 224.7p, after US telecoms giant AT&T (NYSE: T – news) said it was not planning a takeover the British business.

Short-term traders had been piling into the UK telecoms group amid frenzied speculation that Vodafone could be an acquisition target when it offloads its Verizon Wireless stake. As a near-term deal was ruled out, many fled the stock but the shares recovered during the day as some bet that AT&T was simply pausing until the European regulatory situation becomes clearer.

Albemarle & Bond (Other OTC: ABMLF – news) shares collapsed when a buyer failed to materialise for the pawnbroker. The Aim-listed business that specialises in flogging other peoples’ wares shares plunged 58.4pc, or 11.25, to a record low of 8p as analysts voiced administration as a likely outcome.

Just as the markets feared deal making was evaporating, mid-capper F&C Asset Management provided some tonic as it emerged Canada’s Bank of Montreal (BMO) had tabled a takeover offer at 120p a share. F&C shares jumped by 22.9, or 24.5pc, to 115.7p after it said it was likely to accept the firm offer. The deal comes just five months after Edward Bramson, who steered the company’s turnaround, stepped down as chairman.

On the flip side for fund managers, blue-chip Hargreaves Lansdown (LSE: HL.L – news) was the second-biggest faller on the FTSE 100, closing down 80p, or 5.3pc, at £14.29 after Barclays (LSE: BARC.L – news) ramped up the investment product sales platform price war. The high street bank said it would cap its administration fee at 0.35pc per account a year, undercutting Hargreaves’ 0.45pc.

Utility companies Severn Trent (Other OTC: STRNY – news) and United Utilities (LSE: UU.L – news) both saw their shares rise towards the top of the FTSE 100 after a period of regulatory muddy water became clearer. The much anticipated price review from Ofwat said that weighted average cost of capital should be at 3.85pc less than the 4.3pc average returns demanded by the industry. However United Utilities claimed the top spot on the FTSE 100 rising 13, or 1.85pc, to 703.5p, while Severn Trent lifted put on 22p to £17 as the outcome had been widely trailed and was not as bad as a possible worst-case scenario for the sector.

Royal Bank of Scotland (LSE: RBS.L – news) swiftly shed 7.5, or 2.2pc, to 332.2p in late trading after the taxpayer-backed bank said it will need to set aside another £3.1bn to settle claims relating to mortgage products, PPI claims and interest rate hedging.

Fashion retailer SuperGroup (Other OTC: SEPGY – news) lost 70 or 4.6pc to £14.55, pushed down by an analyst note from Oriel Securities cutting its recommendation from “Buy” to “Hold” on the belief the retailer will not be able to maintain its stellar growth.

Rarely do a semiconductor company and a drinks can manufacturer have much in common, but both ARM Holdings (LSE: ARM.L – news) and Rexam (LSE: REX.L – news) saw their shares drop by 20.5 to 957.5p and 2.9 to 497.1p respectively after announcing Stuart Chambers, chairman of Rexam, would succeed Sir John Buchanan as ARM chairman.

In other City moves, equipment and plant hire firm Speedy Hire (LSE: SDY.L – news) shares sank by 3 to 62p after the group promoted its chief operating officer Mark Rogerson to chief executive after Steve Corcoran resigned in November over a £5m accounting black hole.

With a flood of flotations expected and newsagent chain McColls the latest to jump on board the initial public offering bandwagon, it is no wonder the London Stock Exchange is enjoying a boost.

Despite other equities skidding down the LSE’s indices, the exchange’s shares rose after Numis raised its target price for LSE to 1690p from 1477p, while Barclays was even more bullish raising the price to 2200p from 1800p. LSE shares rose 10p, or 0.55pc, £18.21.

Smith & Nephew (LSE: SN.L – news) a lso enjoyed a boost from analysts with experts at UBS (Xetra: UB0BL6 – news) raising their target price for the medical devices business to 1000p from 780p, lifting the shares 2 to 885p.

Over on Aim, shares in Renewable Energy Generation rose by 1 to 73.25p after the group said that it had signed contracts for the construction and financing of a 18 megawatt bio-power plant in Yorkshire. Analysts at Arden Partners (Other OTC: PGPHF – news) updated their research on the basis that it will treble the company’s bio-power generation capacity.

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