Weak miners dent FTSE as Ukraine, earnings jitters persist

Reuters - UK Focus

* FTSE 100 index falls 0.5 percent

* Miners top sectoral fallers

* SABMiller (LSE: SAB.L - news) shares drop after sales data

* G4S (LSE: GFS.L - news) hit by Deutsche Bank (Xetra: DBK.DE - news) downgrade

By Tricia Wright

LONDON, April 15 (Reuters) - Britain's top shares fell onTuesday, weighed down by miners on fears over slowing demand inChina, while the deteriorating situation in Ukraine and concernsabout corporate earnings knocked sentiment more broadly.

Miners came under pressure alongside basemetals after data showed that the Chinese money supply grew atthe weakest pace in more than a decade in March, another sign ofsoftening economic momentum in the world's top metals consumer.

Global miner Rio Tinto (Xetra: 855018 - news) , off 3 percent, led themarket lower after saying weather-related disruptions inAustralia and Canada cut its iron ore shipments.

The sector declines accounted for around a third of the FTSE100's points decline, with the UK benchmark down 31.47points, or 0.5 percent, at 6,552.29 points by 1437 GMT, tradingback in the red after Monday's 0.3 percent rise.

The index last week suffered its biggest weekly loss in amonth, dropping 2 percent as Wall Street's fears aboutover-stretched stock valuations, particularly in the technologysector, spread to Europe. With Intel and Yahoo (TLO: YA-U.TI - news)set to report earnings on Tuesday, those concerns may resurface.

"(They) will feed into the fears about the tech sector,particularly if they miss expectations," CMC Markets seniormarket analyst Michael Hewson said.

"I think markets going into the Easter break will be alittle bit reluctant to get aggressively long stocks ... We need(a significant beat on the earnings for this week) and asignificant ratcheting down in tensions in the Ukraine, neitherof which I expect."

Ukrainian armed forces on Tuesday launched a "specialoperation" against separatists in the town of Kramatorsk in theeast of the country, Interfax news agency quoted the DefenceMinistry as saying.

BIG FALLER

Underscoring the worries about earnings, brewer SABMiller (Berlin: BRW1.BE - news) fell 2.4 percent, one of the biggest declines in theFTSE 100. Disappointing full-year sales triggered profit-takingon a stock that trades at a premium to all its peers.

Charts signalled more falls, with analysts saying the FTSE100 could move to around the bottom end of a range, between6,400 to 6,800 points, it has been trapped in since October.

"It does feel a bit heavy with recent sell-offs being moreintense than rallying periods. The key level is 6,500 and ifthis gives way then I would expect to see some more downsideaction towards 2014 lows (of 6,416)," FOREX.com technicalanalyst Fawad Razaqzada said.

Security (LSE: SRG.L - news) group G4S was another big faller, off 2.8percent, with traders blaming a Deutsche Bank rating downgradeto "sell" from "hold" and target price cut to 210 pence from 221pence. The shares are currently trading at 241 pence.

The investment bank acknowledged G4S's efforts to overhaulitself following a series of damaging failures and cited itsexposure to emerging markets as a strength. But it reckoned itsvaluation is looking full.

G4S trades at a premium to its peers. It is on a 12-monthforward price/earnings ratio of 16.9 times, according to ThomsonReuters StarMine SmartEstimates, which focus on the up-to-datepredictions of the historically most accurate analysts.

Smaller security firm Securitas (Other OTC: SCTBF - news) , meanwhile,trades on 12.8 times, while outsourcing peers Serco andCapita (LSE: CPI.L - news) are on 14.2 times and 16.2 times respectively. (Additional reporting by Atul Prakash; Editing by AlisonWilliams)

View Comments (0)