LONDON MARKETS: U.K. Stocks Choppy As Burberry Drops
07/11/2012| 07:45am US/Eastern
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By Sara Sjolin and Preeti Upadhyaya, MarketWatch
LONDON (MarketWatch) -- U.K. stocks swung between small gains and losses on Wednesday, as luxury retailer Burberry Group PLC added pressure after reporting slowed growth in first quarter, while oil firms climbed along with rising oil prices.
The FTSE 100 index dropped 0.1% to 5,661.10.
Burberry (>> BURY GROU ADR) posted the biggest loss in the index, off 5.8%. The company reported that fiscal first-quarter sales rose but the growth rate lagged that of the year-earlier period. At constant currencies, revenue jumped 11%, but that rate slowed from 34% in the year-ago quarter.
GlaxoSmithKline PLC (>> GlaxoSmithKline plc) advanced 0.8% as its Japanese partner Shionogi-ViiV Healthcare reported progress in a Phase III study of dolutegravir in a regimen to treat certain adults with HIV. ViiV is a joint venture of GlaxoSmithKline and Pfizer Inc., the New York health-care firm.
For the broader U.K. markets, stocks tracked a volatile trading session in Europe, where investors cheered additional austerity in Spain, but remained cautious about growth in the global economy.
Oil firms lend support in the U.K., as oil prices rose above $85 a barrel.
BP PLC (>> BP plc) took on 0.8%, Royal Dutch Shell PLC (RDSA) (RDSB) picked up 0.6% and Tullow Oil PLC gained 0.8%.
Among other notable gainers, ICAP PLC was up 1.8% after announcing that the company expects to save 50 million pounds ($77.8 million) per year by the end of the current financial year, substantially cutting costs.
Weighing on the U.K. index, utility firm SSE PLC dropped 1.3%, after Morgan Stanley cut the stock to underweight from equal-weight. In addition, the bank cut Centrica PLC to equal-weight from overweight, citing tougher competition and the weak economy. Shares of Centrica lost 1.2%.
Rolls-Royce Holdings PLC shed 1.6% even as it announced it had won an order for its Trent engines worth $280 million Wednesday.
"I would assume that the $280 million Trent engines contract does not have a really significant size compared to Rolls Royce's order book value - which was £62.2 billion in 2011 - and company profit, being £11,277 million in 2011, to have a strong positive impact on the stock," said Henrik Heidenkamp, research fellow at Royal United Services Institute for Defence and Security Studies.
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