London Report: FTSE records its first quarterly drop since June

BABCOCK was the star performer among Britain’s top shares yesterday as a nuclear contract win helped it outperform a lacklustre showing on the broader blue-chip index, which suffered its first quarterly drop since June.

The FTSE 100 ended down 17.21 points, or 0.3 per cent, at 6,598.37 points, after a see-saw session which saw it trade between 6,583 and 6,658, leaving it down 2.2 per cent for the year on the last day of the first quarter.

Traders saw yesterday’s trade as emblematic of the index’s torrid start to the year, with concern over the economic impact of tension between Russia and the West, as well as weaker data from the United States and China, having knocked sentiment.

“It’s been a choppy first quarter anyway and I think there’s been some rebalancing going on before we go into the second quarter,” said TJM Partners trader Manoj Ladwa.

Among bright spots, Babcock rose 4.3 per cent in heavy trade after the engineering contractor and its US peer Fluor were named preferred bidders for a 14-year, £7bn contract to manage the decommissioning of Britain’s nuclear sites.

Yesterday’s gains saw the stock almost recoup its losses from last week when Babcock announced a big rights issue to fund the acquisition of helicopter firm Avincis.

“Positivity in the stock from what I call ‘gold-plated government contracts’ (on account of both prestige and value) should extend the share price to my six-month target of at least 1,550p,” said Jordan Hiscott, a senior trader at Gekko Global Markets. The shares closed on Monday at 1,347p.

Trading volume in Babcock stood at five and a half times its 90-day daily average. Turnover for the British benchmark as a whole was one and a fifth times its daily average.

Mining companies rose 0.3 per cent. That took their rally since their low on 20 March to around 5.5 per cent.

A string of weak economic data from China has led to expectations that its government will try to boost demand in the world’s largest metals consumer. The Chinese Premier said last week China could act to support infrastructure investment.

But the sector retreated from an intraday peak as copper stalled after earlier hitting a two-week high.

“Until we’ve got further clarity on what’s going to happen...it’s probably wise for people just to be a bit more cautious and take a bit of money off the table,” commented Matt Basi, head of sales trading at CMC Markets.