London Report: Financials hold FTSE down yet Sky gives a lift

BRITAIN’S top share index steadied near two-month highs yesterday, with a sell-off in financials offset by a crop of solid updates in the healthcare and retail sectors, while BSkyB shares jumped following a note from UBS.

The broadcasting giant closed up 3.75 per cent after UBS analysts suggested various potential merger activities and said the outlook remains strong despite BT Sport’s challenge.

Meanwhile, market investors are scrutinising corporate updates for clues on whether the quarterly reporting season will be sufficiently strong to justify the relatively expensive valuations at which the equity market currently trades. So far the signals have been mixed.

Sainsbury rose 2.6 per cent thanks to industry data showing it was the only major British grocer to resist pressure from discounters and keep market share over the recent key Christmas trading period.

Also among the gainers, AstraZeneca rose 2.5 per cent after forecasting a faster-than-expected return to growth.

And pharma rival Shire added 2.7 per cent in a late rally after saying earnings growth would come in at the upper end of earlier guidance.

The updates, however, were not enough to push the FTSE 100 out of its recent trading range, especially given weak updates in other sectors.

“This year it seems that earnings will matter even more ... so I think stock picking will become more important, rather than what the passive investor has become accustomed to,” said Brenda Kelly, analyst at IG Markets.

The FTSE 100 closed up 0.1 per cent at 6,766.86 points, failing to hold onto an earlier two-month intraday high of 6,772.63 points.

Financial stocks put downward pressure on the index after news of steep client outflows at mid-cap Ashmore.

Ashmore tumbled 12.4 per cent, posting its biggest one-day drop in five years, after saying volatility in core emerging markets had spooked investors, who withdrew a net $3.5bn from its funds in the last three months of 2013.

The drop in mid-cap Ashmore helped push the FTSE 250 down 0.1 per cent, and the negative sentiment also reverberated around its blue-chip peers.

Aberdeen Asset Management, which is due to issue a trading update tomorrow and which also has a strong focus on emerging markets, dropped 1.5 per cent, while Schroders fell 1.7 per cent.