ftse hit as rbs stake sale slakes demand
FTSE hit as RBS stake sale slakes demand September 9, 2004 5:50am ET (Reuters)
By Steve Slater
LONDON, Sept 9 (Reuters) - Britain's top shares fell on Thursday as Royal Bank of Scotland sagged after a major placing of its shares, which dealers said sucked demand away from the broader market and as catering company Compass tumbled after warning on profits.
Spain's Santander said it was selling up to 79 million RBS shares [ID:nLAG000542] via a placing, as part of an unwinding of a strategic alliance with RBS. Dealers said the placing was already fully covered and shares were expected to be sold at between 1,550 and 1,560 pence apiece, raising more than 1.2 billion pounds. RBS shares fell 2.6 percent at 1,555p. It was the second big placing of RBS shares this year after the British bank raised 2.5 billion pounds in May to help fund its purchase of U.S. bank Charter One.
"The placing will get well taken for a company like RBS as it's been such a stellar performer, but it does leave less cash to invest elsewhere," one dealer said. "Institutions had been sitting on a lot of cash and this will suck some of it out.
"On the basis that the recent (share market) rise has been in pretty thin trading it is a negative for the market," he added. But Abbey National shares nudged 0.4 percent higher, as dealers said Santander's fundraising could help it increase the amount of cash it offers for the UK bank.
By 0920 GMT the FTSE 100 was down 16.8 points, or 0.4 percent, at 4,541.6, after falling as low as 4,533.3.
U.S. stocks were expected to dip after Wednesday's positive comments from U.S. Federal Reserve Chairman Alan Greenspan, who said the economy was pulling out of a summer soft patch, were overshadowed by gloomy corporate news.
Meanwhile, UK interest rates are widely expected to be left on hold when the Bank of England concludes its latest meeting at 1100 GMT, following signs that a series of interest rate rises have cooled the housing market and consumer spending.
COMPASS HEADS SOUTH
Leading the FTSE's descent was Compass, whose shares crashed 25 percent to an 18-month low after it said summer trading had been disappointing in continental Europe and future profits would be hit by a host of factors.
Mid-cap shares were led lower by retailer MFI Furniture , whose shares slumped 15 percent after it warned that second half profits would be substantially below that of the first half.
Dealers said talk that Marks & Spencer 's recent trading had continued to struggle had knocked its shares down 2 percent. M&S was not immediately available to comment.
Broadcaster ITV dipped 2.1 percent as dealers said concerns about growth in 2005 outweighed robust results, while advertising firm WPP shed 1.9 percent after it offered to pay more than $1.25 billion for U.S. advertising firm Grey Global, according to the Wall Street Journal. WPP was expected to bid, but there are fears it could get involved in a bidding battle with France's Havas.
InterContinental Hotels bucked the negative trend and rose 2.7 percent after it reported half year profits at the top end of forecasts and saying it planned to return a further 750 million pounds to investors [ID:nL09613755]. Defence firm BAE Systems added 0.8 percent after solid results.
Pubs group Enterprise Inns rose for the fourth straight day, helped by talk that a UK parliamentary investigation into the relationship between pubs and their tenants could come out more positive for the pubs than had been feared. Dealers said Smith Barney had also upgraded its rating on Enterprise to "buy", but the bank declined to comment. End of Story
