FTSE fails to shrug off emerging market and US tapering fears

Imperial Tobacco (LSE: IMT.L – news) sparked up the bluechips, rising 37, or 2.62pc to £14.48 after a bullish note from Goldman Sachs (NYSE: GS-PB – news) raised the possibility of a bumper payout for investors.

Imperial Tobacco could distribute £8.8bn of cash over the next four years as it enjoys a revival in the consumer staples market, the bank said. The majority of the payout would be in the form of dividends (£6.3bn), with the remainder being through buybacks (£2.5bn), Goldman Sachs said.

Fanning the flames further, the analysts raised the company as a potential attractive takeover target. The bank also reaffirmed peer British American Tobacco as a “Buy”, while acknowledging foreign currency headwinds, which also lifted the business by 26.5 to £29.16.

The UK’s biggest phone company, BT , was also London’s biggest blue-chip riser yesterday, finishing up 12.4, or 3.4pc, to 383.3p, after results showed its aggressive push into the pay-TV market was paying off. Arch football rights rival, BSkyB, dipped by 2 to 876p, as BT’s results took the shine off the figures it reported a day earlier.

The drinks sector took a battering with Coca Cola Hellenic Bottling Company retreating 3.23pc, or 54p, to £16.13, the worst performer on the FTSE 100 on the back of fears of an emerging markets rout. Brewer SAB Miller took an early beating on the big cap index after analysts at Societe Generale (Paris: FR0000130809 – news) cut its recommendation to a “Hold” on the back of its emerging markets exposure. However, the Foster beer maker recovered most of its morning losses to close down 13, or 0.47pc, to £27.40. Rival drinks makers Diageo (LSE: DGE.L – news) , which was Thursday’s biggest faller, also sank by a further 57 to £17.63 during the morning.

Meanwhile, Burberry , which has been caught in the eye of the emerging markets storm, enjoyed a spell on the FTSE 100 risers leader board after luxury giant Louis Vuitton Moet Hennessy reported sales of its leathergoods accelerated in the last quarter. Investors hoped that the uplift meant momentum will also return to Burberry and shares lifted by 37 to 804

January blues struck the FTSE 100 as traders ruminated on the US tapering programme. On the last day of the month the index sank by 28.01 to 0.43 to 6510.4 points. However, the FTSE 250 , which is more representative of British industry, stayed positive rising 6.79 points to 19418.34