Reuters: Hot Stocks: Britain's FTSE edges lower as analysts cut Carnival

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Britain's FTSE edges lower as analysts cut Carnival Sep 25th 2013, 07:52 Wed Sep 25, 2013 3:52am EDT * FTSE 100 down 0.3 percent * Technical support around 6,540-6,550 in focus * Carnival hit as analysts react to profit warning By Toni Vorobyova LONDON, Sept 25 (Reuters) - Britain's top share index edged lower early on Wednesday, with Carnival hit by a spate of analyst downgrades after a profit warning and with broad market sentiment depressed by political tensions in the United States. Carnival dropped 5.7 percent to 21.30 pounds, the FTSE 100's top faller for the second session in a row, after Tuesday's warning of a possible loss prompted Morgan Stanley to downgrade the cruise operator to 'underweight'. Several other banks also cut price targets for the stock. "It still has a lot of headwinds ... Levels-wise, if we don't get support at mid-June lows around 21 pounds, then you are talking back to 20 quid at the end of May, which is a fair fall back from 26 quid (in) early August," said Mike van Dulken, head of research at Accendo Markets. Other top fallers included Centrica, Old Mutual and RSA, all of which traded without entitlement to the latest dividend payout on Wednesday. Their shares fell 1.8 to 2.8 percent. The FTSE 100 was down 17.67 points, or 0.3 percent, at 6,553.79 points by 0725 GMT, testing technical support around the 6,550-6,540 range, which has acted as a floor for the past two weeks. "We are just testing the rising lows of September, so if we can't regain those, then the downtrend from late last week is still intact and the uptrend from the last three months could be called into question," Accendo's van Dulken said. Overall, volumes were expected to be subdued in the absence of major macroeconomic events and in the face of fiscal uncertainty in the United States, where British blue chips earn nearly a quarter of their revenues. The world's biggest economy faces a federal government shutdown if politicians cannot agree on a budget by the end of the month. Tensions continued overnight, with a trio of Tea Party-backed U.S. senators threatening to stall a bill, although they ran into resistance from other Republicans. Although most investors expect that a deal will eventually be struck, and that the United States will also raise its debt ceiling in coming weeks to avoid a default, markets were set to remain volatile until the issues are resolved. "A government shutdown seems increasingly likely ... This could temporarily weigh on the economy and confidence ... However, the example of 1995 shows that it would have little market or economic impact if it lasts for only a few weeks," analysts at Exane BNP Paribas said in a note. "The main threat would be the failure to raise the debt ceiling in late October, as it would imply a possible technical U.S. default and/or sharply higher U.S. bond yields. "But ... we believe that a debt ceiling breach remains a tail risk at this stage." (Editing by Catherine Evans) Link this Share this Digg this Email Reprints

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