Market Report: Arm dives as boss cashes in £2m worth of stock

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The Independent Online

It is hardly a vote of confidence when your boss decides it is time to sell some shares, as Arm Holdings found to its cost yesterday. The chip designer closed deep in the red last night, despite its major customer Apple reaching new heights, after it announced that chief executive Warren East had cashed in more than £2m -worth of stock.

The City is used to Arm being supported by bullish news from Apple, and there has been plenty of that recently. The US tech giant yesterday became only the fifth company of all time to see its market capitalisation move above $500bn (£314bn) amid excitement over the expected upcoming launch of the iPad 3.

Yet instead of following Apple – whose tablets use its technology – higher as traders expected, Arm dropped 14p to 569.5p after revealing that Mr East had decided to get rid of 350,000 shares at 574.55p a pop, netting him a cool £2.01m.

It was also not helped by Bernstein Research's Pierre Ferragu reiterating his "sell" advice and warning that its "recent bump in royalty revenue growth will slow down". In addition, the analyst predicted a slowdown in its licensing revenues, although he did play down competition concerns regarding Intel, saying it was "still a long way from being a credible threat... in smartphones and tablets".

Overall, a late slide meant the FTSE 100 dropped below the 5,900 level, with the blue-chip index finishing 56.4 points worse off at 5,871.51. The second round of cheap loans from the European Central Bank failed to prompt much movement, and the real damage was done by US Federal Reserve chairman Ben Bernanke's warning that – following promising GDP figures from the country – the market should not get too excited over recent positive economic data.

Essar Energy slumped 8.5p to 104.9p, setting a new, all-time low, after it was hit by a drastic downgrade from Credit Suisse. The broker's scribblers slashed their target price by nearly two-thirds, cutting it from 435p to 155p, and they also removed their "buy" rating following Monday's disappointing final results.

The group, which is set to be relegated from the Footsie after next week's review of the indices, has suffered a torrid run, shedding more than 80 per cent over the last year. Vague speculation was reheated earlier in the week that its majority shareholders may be interested in taking it private again, although the idea has been widely dismissed.

ITV was attracting an appreciative audience after the X Factor-broadcaster beat market forecasts by posting a 13 per cent jump in its full-year earnings. In response, the group jumped to the Footsie's summit, shifting up 5.45p, or 6.77 per cent, to 85.95p.

In a poor session for the diggers, Xstrata failed to hold on to its early gains. The Anglo-Swiss miner slipped 21.5p to 1,200p despite HSBC claiming that calls for an improvement in the terms of its planned merger with Glencore were likely to be answered.

Saying the commodities trader, which fell 6.35p to 432p, would probably need to provide "some form of a sweetener", the broker's analysts calculated that it would be fairer if Glencore raised its offer from 2.8 to 3.3 shares for every one of Xstrata's.

Elsewhere, HSBC edged back 4p to 555.35p amid reports claiming the bank is nearing a $1bn disposal of its general insurance business to France's AXA and Australia's QBE.

At the same time peer Standard Chartered crept down 4.5p to 1,619p, even though it announced record earnings for 2011 – the ninth straight year it has managed the feat.

Down on the FTSE 250, Bodycote was fired up to a new, all-time high by revived bid talk. The engineer – which jumped nearly 16 per cent in one session last week after releasing its final results – was lifted another 20p to 420p as Jefferies' Andy Douglas upgraded his advice to "buy" and said it "could be a potentially interesting asset to a predator".

Aberdeen Asset Management was knocked back 14.2p to 239.35p by Credit Suisse selling another chunk of its shares, with the Swiss bank having already got rid of a 5 per cent stake last week.

International Personal Finance finished in pole position after the emerging markets lender announced annual pre-tax profits of £100.5m – its highest ever – prompting it up 10.48 per cent to 247.7p.

Thomas Cook continued its remarkable recent rally, with the troubled tour operator flying up another 22.83 per cent to 28.25p. It means the small-cap group's share price has more than doubled over the last six sessions, with the bounce prompting vague speculation bitter rival Tui Travel (up 0.3p to 198p) could make an approach. However, the idea was greeted with disbelief by many, who pointed out the severe competition concerns such a tie-up would cause.