L&G, William Hill lead FTSE lower on Budget blow

By Sudip Kar-Gupta

LONDON (Reuters) – The FTSE 100 slipped on Wednesday, with insurer Legal & General and gambling company William Hill slumping as changes imposed by the UK budget threatened their profits.

The blue-chip FTSE 100 index, which rose 14.4 percent in 2013 and came close to a 13-year high in January, was down by 0.4 percent, or 24.95 points, at 6,580.33 points in late session trading.

British Chancellor George Osborne’s budget scrapped a requirement that pensions savings be used to buy an annuity. It also imposed a tax on certain betting machines. The first hit Legal & General (L&G), the second William Hill. Both under-performed the broader market decline.

L&G slid 7.2 percent lower in heavy volume. Rival Aviva fell 6.7 percent.

“The annuity business was a very solid profit driver for the insurers, so you might expect to see some profit downgrades,” said Dafydd Davies, senior trader at Prime Wealth Group.

William Hill dropped by 7 percent and competing gambling company Ladbrokes dived 13.3 percent after Osborne announced a new tax on fixed-odds betting terminals.

LOOKING FOR RECOVERY

The FTSE is down by around 2.5 percent since the start of 2014. However, many traders expect it to recover later this year and reach a record high of 7,000 points as the UK’s economic recovery continues. The British government’s budget watchdog on Wednesday raised its economist forecast for this year.

“We’re still in an uptrend for now. I expect record highs to come mid-April or early May,” said JNF Capital trader Rick Jones.

(Additional reporting by Tricia Wright; Editing by Larry King)