Royal Mail sale and Johnson Matthey hit FTSE - London Report

BRITAIN’S top share index fell yesterday, led lower by specialty chemicals maker Johnson Matthey and ex-dividend stocks in a broad sell-off in equities.

Johnson Matthey, the world’s largest maker of auto catalysts, shed 5.3 per cent, making it the top FTSE 100 faller.

The company posted a small rise in annual profit helped by higher sales of catalysts in Europe, but investors worried about an unexpectedly sharp increase in debt caused by a rise in working capital and weaker precious metals prices, which have hit its metals division in the last year.

“Rising car sales in Europe and tighter regulation on fuel discharges drove profits higher, but the dreary outlook for the metal business has put pressure on the stock,” David Madden, a market analyst at IG, said in a note to the market.

Royal Mail fell 4.9 per cent after finance minister George Osborne said Britain will sell its 30 per cent stake in the postal operator.

The FTSE 100 closed down 1.3 per cent at 6,859.24.

“If we look across developed markets, sell-off in equities is pretty broad. To me, it’s probably more to do with monetary policy than anything else,” said James Butterfill, global equity strategist at Coutts.

The European Central Bank’s insistence on Wednesday that there was no need to adjust monetary policy in the face of volatility rattled financial markets. The sell-off on the FTSE put all sectors in negative territory.

Many of the top fallers traded without the attraction of their latest dividend payouts, with National Grid and WPP dropping 5.1 per cent and 3.5 per cent respectively.

Commodity stocks were also weaker, with gold pinned near a three-year low and further downside to metal prices seen. UBS trimmed its full year target for the FTSE 100 to 7,200 points from 7,300, citing weak commodity stocks, even as it raised its target price for the STOXX Europe 600.

“We see FTSE 100 earnings falling 8 percent this year [in the main, due to the fall in commodity prices, but rebounding 10 percent in 2016,” analysts at UBS said in a note.

Among the few gainers, budget airline easyJet rose 0.6 per cent after it reported traffic figures.

“Shares in easyJet are outperforming blue-chip rivals after monthly traffic statistics pointed to monthly passenger growth... coupled with load factors up one to two percentage points to exceed 91 per cent,” said Mike van Dulken, of Accendo Markets.