Reuters: Hot Stocks: Cyclicals lead Britain's FTSE lower after Fed minutes knock sentiment

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Cyclicals lead Britain's FTSE lower after Fed minutes knock sentiment Feb 21st 2013, 12:43 Thu Feb 21, 2013 7:43am EST * FTSE 100 sheds 1.7 percent * Euro zone PMIs also weigh on sentiment * Miners sell-off, Billiton hit by donwgrades * BAE one of only two risers on buyback, dividend appeal By Alistair Smout LONDON, Feb 21 (Reuters) - Britain's blue chip share index fell below 6,300 for the first time in 10 days on Thursday on concerns the Federal Reserve could end its stimulus programme sooner than expected, removing a driver of the recent equity rally. Stocks that benefit the most in rising markets, or "cyclicals" fell the furthest, with commodity stocks and banks combining to take 45 points off the FTSE 100 index. A number of Federal Reserve officials think the central bank might have to slow or stop its asset purchase programme before seeing the pickup in hiring the programme is designed to deliver, according to minutes of the central bank's policy meeting last month. "The minutes of the Fed have provided some excuse for some profit taking, which the market was looking for," Jeremy Batstone-Carr, analyst at Charles Stanley, said. Although the minutes drew attention to a debate by Fed policymakers over the stimulus programme, Batstone-Carr thought that the programme was unlikely to be wound down soon. "However, if the U.S. economy is strong enough to hit the Fed's targets, the stimulus will end or taper sooner rather than later, and if it's much weaker than those targets, then that takes the carpet from underneath those investors in cyclical stocks too." Also weighing on sentiment were worse-than-expected euro zone purchasing managers surveys, which dealt a blow to hopes the currency bloc might emerge from recession soon. By 1123 GMT, the FTSE 100 was down 105.52 points, or 1.7 percent, at 6,289.85. The index fell below 6,300 for the first time in 10 days, but remained in the 200-point range between 6,200 and 6,400, its trading range over the past month. MINERS PLUMB NEW DEPTHS The FTSE 100 fallers list was dominated by mining stocks as concerns about an end to U.S. monetary stimulus hit a sector already hampered by weaker metals prices and market talk of a hedge fund liquidating big positions in commodities. The sector hit its lowest point in over a month. BHP Billiton was among the worst off, tumbling 3.3 percent. It extended falls from the previous session when it reported its worst profit drop in more than a decade, with Citi downgrading its rating on the stock to "neutral". All but two blue chip stocks fell in the broad-based sell-off. Defence firm BAE topped the pair of blue-chip risers, gaining 4.8 percent, as investors welcomed news of a share buyback and that the company had increased its dividend by 4 percent despite posting a fall in profits. "The implicit message is a powerful one and positive, in our view," Jefferies said in a note, reiterating its "buy" stance on the stock. (Additional reporting by Francesco Canepa and Tricia Wright; Editing by Susan Fenton) Link this Share this Digg this Email Reprints

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