Reuters: Hot Stocks: Funds lead Britain's FTSE lower on Fed pondering stimulus exit

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Funds lead Britain's FTSE lower on Fed pondering stimulus exit Jun 5th 2013, 11:05 Wed Jun 5, 2013 7:05am EDT * FTSE 100 down 1.2 percent * Aberdeen, Man Group slump after UBS cuts, fund loss * Credit Suisse see 9 percent upside by year end * Tesco drop after sales miss By Alistair Smout LONDON, June 5 (Reuters) - Britain's leading share index fell on Wednesday, led lower by financials after comments from U.S. Federal Reserve officials fanned talk the bank's monetary stimulus may be reduced. Fund managers suffered with Aberdeen Asset Management the top faller on the FTSE 100, down 5.2 percent after being cut from the UBS "key call" list. Mid-cap peer Man Group slumped 14.6 percent after its flagship fund suffered one of its biggest weekly losses. Shares in asset management firms are sometimes seen as long term proxies for stock markets, and the FTSE 100 has fallen 5.2 percent in the last two weeks after Federal Reserve officials pondered their exit strategy from a monetary stimulus programme which has helped to spur the index towards 13 year highs. Dallas Fed President Richard Fisher said on Tuesday the bank might make changes to its bond-buying programme and Kansas City Fed President Esther George said slowing its pace would help wean markets from their dependence on easy money. "Because the conversation is starting about when the end of QE may be, the end is therefore in sight, and therefore some of these longer term plays, like Aberdeen, will get hit," Alastair McCaig, analyst at IG Index, said. "To say that the equity market doesn't have more room on the upside is maybe jumping the gun, but some of these funds might want to look elsewhere to put their money." The FTSE 100, which has rallied around 25 percent in the past year underpinned by central bank stimulus, was down 77.47 points, or 1.2 percent, at 6,481.11 points at 1030 GMT. The FTSE fell below technical support around 6,528, which held up the index earlier this week and corresponds to its March highs, and 6,494, the index's 50-day moving average. Technical traders were monitoring the next support areas at 6,460, the 61.8 percent retracement of the April-to-May rally. Despite the recent correction, analysts at Credit Suisse see 9 percent further upside to the FTSE 100, as the economy improves and earnings pick up, with concerns over the end of quantitative easing overdone. Domestic economic improvement in the form expectation beating UK Services PMI data was not enough to lift the FTSE 100 on Wednesday, however. Contributing to the weaker tone of the day was Tesco, which shed 3.9 percent after reporting a 1 percent fall in underlying sales in the UK in the first quarter, toward the lower end of analysts' expectations and raising doubts about a costly recovery plan. Conglomerate AB Foods, energy distributor National Grid and advertising agency WPP also weighed on the FTSE as they started trading without dividend entitlements. (Reporting by Alistair Smout; editing by Ron Askew) Link this Share this Digg this Email Reprints

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