Shares tick lower as rally stalls

By Jon Hopkins

July 16, 2012 9:28 AM GMT

The FTSE 100 ticked lower on Monday as cautious investors looked to this week's U.S. earnings reports and speech by Federal Reserve Chairman Ben Bernanke to provide near-term direction.

At 08:59 a.m British time, the FTSE 100 <.FTSE> index was down 2.11 points, or 0.1 percent, at 5,664.06, having closed 1.0 percent higher on Friday to end a volatile week a touch higher than where it started.

"Equity markets are expected to mostly remain range-bound, with moderate profit-taking a possibility as some might consider Friday's move to the upside somewhat overdone," said Markus Huber Head of German HNW (high net worth) Trading at ETX Capital.

Weakness in heavyweight mining stocks <.FTNMX1770> was the main drag on the blue chips, accounting for 6.0 points, or about half of the FTSE 100's decline, as copper prices edged lower after hitting a one-week high in the previous session.

Cautious broker comment also weighed on the miners, with Nomura the latest bank to cut commodity price forecasts, earnings estimates and price target across the sector.

Banks <.FTNMX8350> were also as a weak sector as investors awaited further U.S. earnings. Citigroup reports second-quarter numbers on Monday, following on from Friday's well-received results from JPMorgan Chase and Wells Fargo .

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Vikram Pandit, Citigroup's chief executive, has rejected the UK's planned regulations for separating the operations of large banks. He said Citigroup would seek clearance by the end of the year to make a substantial return of capital to shareholders.

Among individual fallers, security firm G4S was the biggest blue chips faller, down 9.3 percent and extending declines into a third straight session on its failure to deliver on the security contract for London's Olympic Games.

"We believe the (G4S) shares could test the low of 232 pence reached following the ISS rights issue failure in 2011. That too resulted in a 50 million pounds shortfall in profits. Assuming the share price does move down sharply this morning, we move our recommendation from buy to hold and reduce our target price to 240p (previously 350p)," Seymour Pierce said in a note.

VODAFONE IN DEMAND

Mobile telecoms firm Vodafone , which has an over 6 percent weighting in the blue chip index, provided the biggest positive, adding around 3 points ahead of a trading update due on Friday.

Vodafone is also poised to secure a $4.5 billion windfall from its American mobile phones venture with Verizon Wireless, with the U.S. firm's board expected to approve the payout at a board meeting of this week, The Sunday Times said.

Smiths Group was the top FTSE 100 percentage gainer, up 2.2 percent after an upgrade to "buy" from Berenberg and non-core disposals.

No important British economic data is scheduled for Monday but there will be a welter of releases later in the week, including the inflation, unemployment, retail sales, and public sector finance figures, together with minutes from the July Bank of England Monetary Policy Committee meeting.

Across the Atlantic, June U.S. retail sales data is due at 01:30 p.m British time on Monday, at the same time as July's Empire State Index, with May business inventories scheduled for 03:00 p.m.

(Reporting by Jon Hopkins; Editing by John Stonestreet)

Shares tick lower as rally stalls

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