London Report: Lacklustre trade leaves FTSE 100 treading water

SUPERMARKET chain Wm Morrison was among the top gainers on the UK’s FTSE 100 yesterday after posting its first-half results but the index continued to toil around the 6,600 level.

Wm Morrison Supermarkets rose 1.8 per cent with traders citing dividend, outlook, and valuation attractions as a trigger for short covering after the firm’s first-half results came in just shy of expectations.

Wm Morrison, the UK’s fourth biggest supermarket, is the 10th most shorted stock – bets the share price will fall – on London’s blue chip FTSE 100, according to data from Markit, while 22 out of 25 analysts covering the stock rating it as either a “hold” or “sell”.

Amec, meanwhile, climbed 1.8 per cent after the British engineer said it will not make an offer for oil and gas construction firm Kentz, as it continues to try to expand in Australia, Africa and the Middle East.

The FTSE 100 closed flat at 6,588.98 in a quiet session – the index traded just 80 per cent of its 90-day daily average volume – with the healthcare sector posting the biggest gains.

AstraZeneca added most points among drugmakers, rising one per cent after French peer Sanofi withdrew its US application for diabetes treatment lixisenatide, which shares the same mechanism as AZN’s Byetta/Byduren which is already on the market. Panmure Gordon said lixisenatide’s delay to 2016 at the earliest allows AZN more room to grow the product and asked more broadly if now might be the time to buy AZN’s shares with the sequence of market downgrades for the stock beginning to level off?

Aggreko fell 2.4 per cent with traders citing a note from Deutsche Bank as the catalyst. The investment bank cut its target price on the company by 11 percent to 1,870p and gave a cautious outlook for earnings.

Aggreko, which released two profit warnings late last year, is currently the third most shorted stock on the FTSE 100 with nearly 25 per cent of the stock available for loan being utilised by investors betting the stock will fall, data from Markit showed. Miners were the main weight on the index, giving up some of their recent gains which had been secured following robust global economic data.

But the British stock market is set to rise 30 per cent in the next two years as the country’s economy recovers, according to Bank of America Merrill Lynch. It expects the FTSE 100 to hit 7,400 points at the end of 2014, from 6,579.96 points currently.