FTSE retreats from nine-week high after weak company results

By Tricia Wright

LONDON (Reuters) – Britain’s top share index retreated from a nine-week high on Tuesday, knocked by weak results from Aberdeen Asset Management and Barclays.

The blue-chip FTSE 100 index was down 9.54 points, or 0.1 percent, at 6,812.88 points by 1048 GMT, after hitting 6,838.17 on Friday, its highest level since late February. The market was closed on Monday for a public holiday.

Investment manager Aberdeen Asset Management dropped 5.9 percent, the top FTSE 100 faller, on a forecast-lagging 3-percent fall in pretax profit after clients pulled money out of its core emerging market and Asian equity funds.

“Reporting seasons are now more important than they have been for many years because the market is at a valuation level where some earnings growth is priced in. When they miss earnings, it does matter to the market now,” Macquarie strategist Daniel McCormack said.

“On a 12- to 18-month view, there is plenty of upside left in the market because earnings will start to improve, but I struggle to see a near-term positive catalyst for the market to push materially higher.”

Barclays shed 4.5 percent after its profits fell 5 percent in the first quarter as revenues dropped in its fixed income business more steeply than at most rivals.

The UK banking index fell 0.8 percent, led lower by Barclays, which also said it will announce on Thursday details of a plan to shrink its investment bank.

“The outcome of the quarter is largely a continuation of the themes outlined at the full-year numbers, with Thursday’s strategy announcement likely to be rather more consequential,” Hargreaves Lansdown Stockbrokers head of equities Richard Hunter said in a note.

“…If some of the rumoured changes are implemented, resulting in a more streamlined and obviously profitable bank, the recent upgrade of the market consensus to a buy will have been vindicated.”

BUILDERS BUOYANT

Housebuilders helped limit market losses, reversing recent falls, with traders citing a bullish trading update from Countrywide, Britain’s largest estate agency.

The Thomson Reuters UK Homebuilding index has fallen more than 10 percent from a late February peak, trimming its gains for 2014 to around 3 percent.

It doubled in value during the past three years, underpinned by tight supply and UK initiatives to spur the job-intensive sector, such as the ‘Help-to-Buy’ mortgage scheme.

Barclays said the recent selloff had left attractive valuations.

“We see strong fundamentals: greater visibility provided by the extension to the ‘Help-to-Buy’ scheme; a largely disciplined land market; and a more supportive planning system,” Barclays said in a note. “Where headwinds exist, notably the threat of rising interest rates, they remain relatively benign in our view.”

Persimmon topped the FTSE 100 leader board, up 3.5 percent at 1,373 pence as Barclays lifted its target price for the stock to 1,540 pence from 1,333.6 pence. Blue-chip peer Barratt Developments rose 2.2 percent, and mid-cap Taylor Wimpey climbed 1.6 percent.

(Additional reporting by Atul Prakash; Editing by John Stonestreet)