FTSE falls on disappointing company updates

By Atul Prakash

LONDON (Reuters) – Britain’s top share index fell again on Wednesday after rebounding from two-week lows in the previous session, as disappointing updates from companies like Melrose and Legal & General weighed on sentiment.

Engineering turnaround specialist Melrose Industries fell 7 percent, the top decliner on the FTSE 100 index, after warning of challenging market conditions and saying sales growth in 2014 would not be easy to achieve.

Legal & General, a provider of life insurance and pensions, was also a major faller, down 2 percent, with analysts flagging a small miss in operational profit.

“Investors are a bit cautious following some poor company updates and the situation in Ukraine remains a threat for the broader market. But generally people will continue to look towards central banks and economic data, which have been quite supportive,” IG analyst Chris Beauchamp said.

“Once you have these temporary weaknesses out of the way, we could push higher from here.”

Markets continue to keep a close eye on the situation in Ukraine, with a sense of guarded calm returning ahead of talks between the United States and Russia aimed at easing East-West tensions and averting the risk of a war.

That allowed investors to focus on fundamentals, such as company earnings, valuations and the economic outlook.

The FTSE 100 was down 34.80 points, or 0.5 percent, at 6,788.97 points at 1118 GMT after rebounding 1.7 percent in the previous session following a fall of 1.5 percent on Monday due to tensions in Ukraine.

“We’re taking a bit of profit but I think we’re going to get some steady action during the course of the day (on) dissipating worries of imminent military action in Ukraine,” said Manoj Ladwa, head of trading at TJM Partners.

The FTSE was also weighed down by five stocks, including miners BHP Billiton and Rio Tinto, going ex-dividend. They took 8.46 points off the index, according to Reuters calculations.

Charts showed the FTSE 100 was seeing technical resistance at 6,835, a level that has capped the index over the past week, and above that at 6,860, a level tested several times over the past year and last seen in 1999.

“I don’t think it’s going to be able to break that resistance until we see some incremental positivity coming out from the Bank of England,” Ladwa said.

However, losses were limited by gains in shares of some companies.

British motor insurer Admiral Group rose 6.6 percent to the top of the FTSE 100 after posting higher than expected pre-tax earnings growth of 7 percent for 2013, boosted by new overseas business.

Standard Chartered was up 0.5 percent after it reassured investors about the strength of its balance sheet and raised its dividend. The bank reported its first drop in annual profits for a decade, however, and gave a weak outlook for the first half.

(Additional reporting by Francesco Canepa; Editing by Catherine Evans)