News Column

FTSE 100 falls back on Russia sanctions and Chinese bond fears

July 17, 2014

Nick Fletcher,

Despite more deal news, leading shares have been hit by global concerns, prompting investors to take profits after recent gains.

The FTSE 100 has fallen 19.52 points to 6765.15 as the US and EU unveiled tougher sanctions against Russia over the situation in Ukraine. Traders fear the move could put further pressure on the global economy as it struggles to recover from the downturn.

Talk of a possible bond default in China has added to the uncertainty.

ITV however has jumped to the top of the leaderboard as John Malone's cable group Liberty Global - which owns Virgin Media - bought a 6.4% stake in the broadcaster from BSkyB for 481m. Despite Liberty saying it did not intend to make an offer for the rest of ITV, its shares have jumped 13p to 196.8p. Investec analyst Steve Liechti said:

Liberty Media share acquisition implies take-over speculation is now likely to be a key part of the investment case, even though Liberty has confirmed that it has no intention to bid (with an implied 6 month moratorium under Takeover Panel rules).

Given recent Liberty Global M&A appetite, we see speculation of further M&A as almost inevitable mid-term implying ITV shares are likely to be valued more on a take-over basis.

But Meggitt, lifted on Wednesday by suggestions that United Technologies could be interested in a bid for the engineering group, has fallen back 10.5p to 526.5p.

Imperial Tobacco, up 63p at 26.93, and British American Tobacco, 21.5p better at 35.30, were both lifted as investors shied away from risk and sought defensive stocks.

Elsewhere Rexam has dropped 16.5p to 520p as Deutsche Bank moved from buy to hold, albeit raising its price target from 550p to 570p.

The company also reportedly has a 6.79% exposure to Russia, so the sanctions news was bound to hit sentiment. Car dealer Inchcape is down 5.5p at 621.5p, since the country is a key market for luxury vehicles.

Mike Ashley'sSports Direct International - never far from the headlines - has fallen 11p to 702.5p as it reported full year underlying profits up 20% to 249.3m, slightly below expectations. The retailer said it was on the lookout for further acquisitions.

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Source: Guardian Web

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