Reuters: Hot Stocks: Britain's FTSE lags after Unilever warning

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Britain's FTSE lags after Unilever warning Oct 1st 2013, 11:04 Tue Oct 1, 2013 7:04am EDT * FTSE 100 down 0.2 pct, lags other European markets * Unilever sales warning hits Reckitt, SABMiller * Investors calm over U.S. government shutdown (Updates prices, quotes, adds detail) By Alistair Smout LONDON, Oct 1 (Reuters) - Britain's top share index fell on Tuesday, lagging other European bourses after a sales warning from Unilever that also hit other companies exposed to emerging markets. Unilever fell 3.6 percent to an 11-month low after the consumer goods company said a slowdown in its emerging markets business had accelerated, prompting a cut to its third quarter sales expectations. Consumer staples such as Unilever had been the share market's outperformers this year, up 20 percent by July. "There's an enormous gulf between emerging market index performance and the performances of stocks like Unilever and Diageo, which have traded at premium multiples," Andy Ash, head of sales at Monument Securities, said. "Having said that, concerns with emerging markets for these stocks aren't anything new, and we're now 20 percent from the (2013) top in Unilever, so anyone selling today is a little bit late to the idea," he added. He said he expected support for the stock around 22.50 pounds. Analysts at Nomura cut their earnings per share forecast and target price on Unilever by 6 percent and said the warning "creates uncertainty for some peers" such as Reckitt Benckiser . Shares in Reckitt were down 1.5 percent. Drinks companies SABMiller and Diageo also suffered, down 2.9 and 1.7 percent, respectively. The four companies were in the top five fallers on the FTSE 100. At 1040 GMT, the FTSE 100 was down 12.71 points, or 0.2 percent, at 6,449.51, with consumer staple stocks wiping over 16 points off the index. Unilever was the 17th least shorted stock on the FTSE 100 with just 0.55 percent of the shares available out on loan, according to Markit, well down from just below 4 percent in June, suggesting the market was not anticipating the warning. "Our client base trades Unilever from the long perspective, because of its quality brands ... but it seems that consumers are going for the budget brads over the premium ones," said Jordan Hiscott, trader at Gekko Global Markets. "So the move down this morning has caught some of our clients out. We've got liquidations of long positions." The FTSE 100 underperformed every major index in Europe, which managed gains as investors took a sanguine view of a partial shutdown of the U.S. government that began overnight, potentially putting up to 1 million workers on unpaid leave, closing parks and stalling medical research. Although there were no signs of a resolution on the budget - which is needed to resolve the shutdown - analysts took the view that a compromise will be found soon, and that politicians will also agree over raising the debt ceiling later this month, thus avoiding a U.S. sovereign default. "As long as they can get a deal in before Friday, I think the volatility of the market should decrease," said Hiscott. The shutdown might also further delay the U.S. Federal Reserve's plans to start tapering its monetary stimulus, some investors speculated. ($1 = 0.6175 British pounds) (Additional Reporting by David Brett and Toni Vorobyova; Editing by John Stonestreet) Link this Share this Digg this Email Reprints

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