Reuters: Hot Stocks: FTSE hits 10-week closing low on growth concerns

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FTSE hits 10-week closing low on growth concerns Apr 17th 2013, 17:02 Wed Apr 17, 2013 1:02pm EDT * FTSE 100 index falls 1 percent * Technicals bleak; 6,200 seen as major support * Miners, oils down on growth concerns * Tesco slips on plan of huge write-off By Atul Prakash LONDON, April 17 (Reuters) - Britain's top share index slipped to a 10-week closing low on Wednesday, pulled down by resource stocks on mounting concerns that global growth could weaken, hurting demand for commodities. The FTSE mining index fell 3.1 percent, the biggest sectoral decliner, followed by the oil and gas index , down 1.8 percent as investors dumped the sectors after recent economic data from China and the United States. Already fragile sentiment got a further beating after the International Monetary Fund late on Tuesday trimmed projections for global economic growth for this year and next, while data showed on Wednesday that European car sales fell 10.3 percent in March. Charts pointed to further declines for the blue chip FTSE 100 index, which fell 60.37 points, or 1 percent, to 6,244.21, the lowest close since early February. It has fallen nearly 3 percent in the past 5 sessions, but is still up about 6 percent so far this year. "There are increasing concerns about the direction of economic growth and some disappointment is coming from corporate earnings," Paul Kavanagh, director of research at Killik, said. "Risks are more weighted towards the downside in corporate earnings. The near-term sentiment has changed to selling rallies rather than buying dips and that can continue for a couple of weeks." Only a fraction of European firms have so far reported results, which have been mixed. In the United States, first-quarter revenue at Yahoo fell shy of expectations, Intel said its current-quarter revenue would decline as much as 8 percent and Bank of America said revenue fell. Britain's biggest retailer Tesco reported an underlying pretax profit of 3.55 billion pounds for the 2012-13 year, broadly in line with analysts' expectations but down 14.5 percent on 2011-12. Tesco shares fell 3.9 percent, also pressured by its move to write down the value of its global operations by $3.5 billion and plans to exit the U.S. market. "This points to an underlying problem that the UK retailers have faced - namely an inability to diversify earnings to the degree which will provide resilience during prolonged economic headwinds," Torben Kaaber, chief executive at Saxo Capital Markets, said in a note. BLEAK TECHNICAL OUTLOOK Luxury brand Burberry bucked the trend, rising 1.8 percent after posting better-than-expected revenue, thanks to strong demand for its more expensive products in China. But technical analysts saw a bearish outlook for the overall index in the near term after recent sharp declines. "We are approaching another important support area at 6,200, which was challenged in February and formed a launch pad for this year's highs," said Cliff Green, an independent technical analyst. "If we start to break and close beneath that, it will complete a head and shoulders pattern and suggest the market could head towards the 5,900 area. I have a feeling that the index is going to break the 6,200 level." The head and shoulders formation indicates a trend reversal and consists of a peak followed by a higher peak and then a lower peak with a break below the neckline, drawn through the lowest points of the two intervening troughs. Lynnden Branigan, analyst at Barclays Capital, said the risk was skewed to the downside. "With commodity prices pushing lower, we are looking for a downturn through April and May." Despite a broad market sell-off, some defensive sectors remained positive. The beverages index rose 0.4 percent, while the personal goods sector was up 1.2 percent as some investors moved from cyclical stocks. An exploration update hurt Tullow Oil, down 9 percent, Northern Petroleum, down 18 percent, and Wessex Exploration, down 45 percent. Their exploration joint venture said they extended the exploration of the offshore French Guiana well, potentially causing a delay in the programme. Tullow's trading volumes surged to 400 percent of its 90-day daily average, against 110 percent for the FTSE 100. (Editing by Ruth Pitchford) Link this Share this Digg this Email Reprints

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