Market Report: GKN hit as car sales on skids across EU

Europe has put the brakes on new car buying and Worcestershire-based engineer GKN's shares have been caught up in the crash. European car sales growth reversed in Agust, the biggest fall in the past six months according to the European Automobile Manufacturers' Association. Registrations fell 8.5 per cent to 722,483 vehicles in August from 789,458 a year earlier. In the year to date sales have fallen by 6.6 per cent to 8.59 million cars.

Punters didn't like the news and drove out of shares in the vehicle to aircraft engineer GKN. GKN, which makes car parts, including electro-magnetic brakes, couplings, clutches and drive shafts, has around 30 per cent of its overall business in Europe.

Although France and Italian car sales were poor, growth was clocked up in Spain where sales rose 3.4 per cent and the UK where they drove up 0.1 per cent.

GKN's car business has been boosted by strong global luxury car sales in the past. But yesterday its shares propelled toward the bottom of the leaderboard where it closed down 8.6p, to 228.3p.

On a lacklustre day in the City, traders were rehashing rumours that a bidder is looking at water company United Utilities. Last month there was vague speculation that a bid could come in from one of a handful of potential interested parties including Canadian Ontario Teachers' Pension Plan, Chinese Investment Corporation and Qatari and Abu Dhabi sovereign wealth funds. At the time the share price was pumped up to a four-year high of 816p a share. This time the – highly speculative buzz – is a 950p-a-share bid from one of the Middle Eastern sovereign wealth funds. Shares in the group, that supplies water to more than three million homes, gushed up 19p to 707.5p.

Other traders poured cold water on the rumour and said that its shares were up because all defensive stocks were in favour yesterday. Investors have turned cautious again, ahead of further eurozone updates. There were plenty of sellers, profit taking after Friday's huge rise on the back of the US QE3 plan. The FTSE 100 lost 25.36 points to 5868.16.

Morgan Stanley scribes said in a note that although many European consumer goods stocks are "relatively expensive" they still contain value and drinks giant Diageo, up 34.5p to 1,718p, and Imperial Tobacco, up 44p to 2,362p, were among stocks highlighted as buys.

Miners and banks fell out of favour as investors rejected the risk and the copper miner Kazakhmys shed 18.5p to 742p.

After the markets closed, strife-hit platinum miner Lonmin said its striking workers had accepted a pay rise offer of 22 per cent. The South African miner, which has faced six weeks of worker unrest, closed up 1p to 650p.

The City is an unforgiving place. After a tough year for Aviva, it is on track with its huge restructure – a shake-up that will see it sell or close up to 15 divisions.

But that isn't enough for two City scribblers. Analysts at Deutsche Bank and Bank of America Merrill Lynch think the market has got overexcited and Aviva's share price rally is overdone. The Deutsche analyst Oliver Steel, in a note entitled No Room For Failure, said: "Even if management were to successfully deliver on the restructuring, Aviva's capital and leverage ratios would still be less good than most peers."

Deutsche downgraded its recommendation to hold from buy, but raised its target price to 375p from 370p. Blair Stewart at Bank of America Merrill Lynch cut the insurer to underperform and gave it a 360p share price target.

Aviva's share price has jumped more than 40 per cent since its June lows and investors have been pleased with its overhaul since the "shareholder spring" when chief executive Andrew Moss was forced out. But punters took note of the broker warnings and the insurer's shares tumbled 14.3p to 344.9p – the biggest faller on the FTSE 100.

On the small caps, digital connections provider Volex was forced to issue an unscheduled trading update due to a change in demand from its largest customer in its consumer division. Analysts at Investec downgraded it to hold with a target share price of 240p but said it "remains likely to finish the year still with less than $5m [£3m] of net debt." Its shares were knocked down 67.75p to 187.5p.

News
Alan Bennett has criticised the “repellent” reality shows which dominate our screens
tvBut he does like Stewart Lee
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
tech
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
PROMOTED VIDEO
News
i100
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits