Falls for RBS, Admiral and Morrisons as the market closes

| November 2, 2012 | 0 Comments

By
This Is Money Reporters

03:56 EST, 2 November 2012


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12:31 EST, 2 November 2012

5.25 (CLOSE): Royal Bank of Scotland and insurance giant Admiral suffered share losses today as third quarter updates spooked investors.

Part-nationalised RBS dropped 2 per cent after revealing another £450 million in charges for payment protection insurance (PPI) mis-selling and its recent IT blunder, while Admiral slumped 5 per cent on fears over slowing revenues.

The wider FTSE 100 Index struggled for direction, closing 6.6 points higher at 5868.6, as Wall Street gave a mixed response to figures showing the world’s biggest economy added a far better-than-expected 171,000 jobs last month.

Two per cent drop: Shares in RBS fell today as the fallout after revealing a further £450 million in charges for PPI mis-selling and an IT blunder.

Two per cent drop: Shares in RBS fell today as the fallout after revealing a further £450 million in charges for PPI mis-selling and an IT blunder.

America’s Dow Jones Industrial Average slipped into the red in early trading as lower oil prices weighed on the US market.

But the cheery US jobs news helped the dollar strengthen, which left the pound lower at 1.60 dollars.
Sterling rose to just under 1.25 euros on mounting optimism over the UK recovery.

Among stocks, RBS was in sharp focus as the banking giant said its additional charges contributed to a bottom-line loss of £1.3 billion in the third quarter.

Shares were initially higher amid further signs of underlying progress, with profits from its core business up 67 per cent year-on-year to £1.6 billion.

But the extra charges – and with the group still being the subject of an investigation into the industry’s Libor scandal – unnerved investors and sent shares down 5.9p to 281.3p.

Car insurer Admiral was also seeing hefty share losses, down 61p to 1081p, after its latest trading update fuelled fears that revenues growth is slowing.

This was despite chief executive Henry Engelhardt arguing that the cycle of the UK car insurance market was at a stage where premium rates are coming down.

Elsewhere, Direct Line Insurance Group – which floated on the stock market last month – fell 3.8p to 195.3p despite reporting a 3% rise in profits from ongoing operations in the nine months to September 30.

Supermarket Morrisons was also in the red ahead of its third quarter update next week as analysts expect figures to reveal sales declines widening to 2 per cent as it loses out amid intense competition in the sector.

Shares in the UK’s fourth biggest grocery chain fell 3.7p to 263.8p.

Drugs giant GlaxoSmithKline was enduring another painful session following a disappointing trading update earlier this week, which saw it warn that price cuts in Europe were hitting sales more than expected.

With a broker downgrade adding to its woes, the group fell 2 per cent or 26p to 1361.5p.

South West Water parent Pennon and fellow utility firm Severn Trent were also knocked by a downbeat broker note, falling 16.5p to 701p and 39p to 1557p respectively.

In the second tier, Currys and PC World parent Dixons Retail continued to benefit from Comet’s descent into administration.

Dixons added another 11 per cent or 2.5p to 25.8p after a 14% rise the previous session on hopes it will pick up business from Comet’s demise.

The biggest FTSE 100 risers were International Airline Group up 5.8p to 169.1p, Burberry ahead 38p to 1253p, Tullow Oil 38p higher at 1445p and Whitbread up 64p to 2456p.

The biggest FTSE 100 fallers were Admiral down 61p to 1081p, Severn Trent off 39p at 1557p, Weir group 43p lower at 1751p and Pennon down 16.5p to 701p.

15:00: The FTSE 100 has lost earlier gains and is now trading 6.48 points down, or 0.11 per cent, at 5855.44.

Royal Bank of Scotland and insurance giant Admiral led the FTSE 100 Index lower today despite good news on the US jobs market.

With US manufacturing figures coming in slightly below expectations, the Dow Jones slipped more than 60 points into the red and the FTSE 100 in London responded with a 7.1 point fall to 5853.

Key data: Today's U.S. jobs report is the last major economic release before the country's Presidential elections on November 6

Key data: Today’s U.S. jobs report is the last major economic release before the country’s Presidential elections on November 6

13:00:

After this morning’s losses, the Footsie is now trading 24.99 points up, or 0.43 per cent, at 5,886.91, fuelled by better-than-expected employment data from the U.S.

The U.S. economy added 171,000 new jobs in October, but the unemployment rate rose to 7.9 per cent from 7.8 per cent after falling sharply from above 8 per cent in September.

12:15:

The UK blue chip index is 8.62 points down, or 0.15 per cent, at 5853.30.

Shares
in part-nationalised Royal Bank of Scotland, which were initially
higher, fell 2 per cent after it revealed another £450million in charges
for payment protection insurance mis-selling and its recent IT blunder.

The banking giant, which is 80 per cent owned by the taxpayer, posted a bottom-line loss of £1.3billion in the third quarter.

RBS was among the stocks in sharp
focus after its third quarter update.
Shares were initially higher amid further signs of underlying progress,
with profits from its core business up 67 per cent year-on-year to
£1.6billion.

But the extra charges – and with the
group still being the subject of an investigation into the industry’s
Libor scandal – unnerved investors and sent shares down 2 per cent or
6.2p to 281.1p.

Elsewhere, Direct Line Insurance
Group – which floated on the stock market last month – fell 2.6p to
196.4p despite reporting a 3 per cent rise in profits from ongoing
operations in the nine months to September 30.

Supermarket Morrisons was also in the
red ahead of its third quarter update next week as analysts expect
figures to reveal sales declines widening to 2 per cent as it loses out
amid intense competition in the sector.

Shares in the UK’s fourth biggest
grocery chain fell 2 per cent or 5p to 262.5p.
Drugs giant GlaxoSmithKline was enduring another painful session
following a disappointing trading update earlier this week, which saw it
warn that price cuts in Europe were hitting sales more than expected. With a broker downgrade adding to its woes, the group fell 3 per cent or 36.8p to 1350.8p.

South West Water parent Pennon and
fellow utility firm Severn Trent were also knocked by a downbeat broker
note, falling 12.5p to 705p.


11:15
:

The Foostsie is 3.85 points down, or 0.07 per cent, at 5858.07.

Admiral Group shares slumped 5.1 per cent, after its latest trading update fuelled fears that revenues growth is slowing.

This was despite chief executive Henry Engelhardt arguing that the cycle
of the UK car insurance market was at a stage where premium rates are
coming down.

Direct
Line Insurance Group, which floated on the stock market last month, fell
1.4p to 197.6p after it reported a 3 per cent rise in profits from
ongoing operations in the nine months to September 30.

8:45:

The FTSE 100 index has opened down 0.1 per cent at 5,856.17 and is now 9,08 points down, or 0.15 per cent, at 5,852.84.

Britain’s top share index fell in early deals today, consolidating
strong gains made in the previous session, with all eyes on October’s
U.S. jobs report.

The
key U.S. data, the last major economic release before the country’s
Presidential elections on November 6, is forecast to show non-farm
payrolls rose 125,000 in October, after a 114,000 increase in September,
although the unemployment rate is seen ticking up to 7.9 per cent
following a fall to 7.8 per cent in the previous month.

The FTSE 100 index closed up 79.22 points, or 1.4 per cent yesterday at 5,861.92 to lodge its biggest single session gain in four weeks, buoyed by some reassuring corporate earnings and upbeat U.S. economic data.

Today’s blue-chip earnings news also reassured.
Royal Bank of Scotland gained 1.6 per cent, after the part-nationalised bank reported an increase in third-quarter operating profit, benefiting from a decline in bad debt charges, and said its restructuring would be complete in the next 18 months.

Stocks to watch today include:

ROYAL BANK OF SCOTLAND – The part-nationalised British bank reported an increase in third-quarter operating profit, benefiting from a decline in bad debt charges, and said its restructuring would be complete in the next 18 months.

STANDARD CHARTERED – The bank is close to wrapping up discussions to resolve U.S. investigations into its Iran-linked transactions and nearing agreement on a fine in the $300-million range, mirroring a much-publicized state settlement over similar allegations, according to four people familiar with the matter.

ADMIRAL GROUP – The motor insurer said third quarter group turnover decreased by 2 per cent to £570million, while group turnover in the year-to-date increased by 3 per cent to £1.740billion, with UK claims trends continuing to be encouraging and company on track to meet expectations for 2012.

DIRECT LINE GROUP – The British motor and home insurer, spun off by Royal Bank of Scotland last month, said it was halfway towards achieving its £100million cost cutting target as it reported a drop in quarterly profit.

HAMBLEDON MINING – The firm said it is recommending a cash offer from African Resources to acquire up to 60 per cent of the firm, in a deal which values the entire existing issued share capital of Hambledon at about £19.6million.

The National Institute for Economic and Social Research (NIESR) forecast that British GDP would dip this year by 0.1 per cent, up from its August forecast of a 0.5 per cent contraction, after surprisingly strong expansion in the third quarter. However, NIESR revised down its 2013 growth forecast to 1.1 percent from 1.3 percent, due to a weaker global outlook.

October’s Markit/CIPS British construction PMI report will be published at this morning. 

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