A combination of speculators latching on to bid hopes and bargain hunters eyeing upside gains shielded Intertek, the testing and inspection specialist, from another round of selling on the FTSE 100 last night.
The stock was marked up by 29p to 1,534p as talk of takeover interest from Swiss rival SGS resurfaced, with the rumour-mongers revisiting the scope for consolidation activity in the testing services sector. Bargain hunters also piled in, taking their cue from the analysts at JP Morgan Cazenove, who, while revising their view to "overweight" from "neutral", said the stock offered "the best growth potential in the sector" , with Intertek trading at discount relative to SGS and in line with Bureau Veritas, a French peer.
Overall, the FTSE 100 endured another session in the red, sliding below the 5,700-point mark with a loss of 58.1 points to 5,665.33. The FTSE 250 fared better, closing 33.54 points lower at 10,435.61, but failed to make any headway. As on Wednesday, the weakness was pinned on sovereign debt fears, with traders nervously watching yields on Greek government bonds balloon to unsettling highs. The latest deficit figures from Eurostat, the EU's statistics agency, which showed that Athens faced a budget shortfall of 13.6 per cent of GDP last year, higher than a previous estimate of just under 13 per cent, also sullied sentiment, as did a move by Moody's to downgrade its rating for Greece.
ARM, the chip-maker which was boosted by Apple's results earlier this week, and which has been repeatedly mentioned as a bid target, was the strongest of the blue chips, adding 8.4p to 258.9p as the rumours resurfaced.
though the sell-off encompassed numerous companies across a variety of sectors, a few stood out. Liberty International, for instance, was 17p behind 502p after Morgan Stanley made some bearish noises on the commercial property group. Switching its stance to "underweight" ahead of a planned demerger, the broker said the split may pressure the share price as the "shareholder base stabilises". Liberty was not alone, however. Sector peers British Land and Land Securities were also caught by the downdraft, losing 8.3p to 472.8p and 12p to 659.5p respectively.
Among financial plays, insurers were decidedly out of favour, with Aviva shedding 11.7p to 374p, Prudential slipping to 545.5p, down 19p, and Legal & General losing 2.25p to 89p, as the market awaited clarity on regulatory moves. The banks, though broadly lower, proved more resilient. Here, Barclays was the weakest, losing 6.15p to 359.7p, with Standard Chartered, down 22p at 1,753p, a close second. Fortunately for taxpayers, the Royal Bank of Scotland, which has been the standout performer in the sector in recent sessions, continued to outperform its peers, closing only marginally lower at 53.85p, down 0.2p.
HSBC was 4.6p weaker at 677.4p despite some words of support from JP Morgan, whose analysts highlighted the upside of monetary tightening. "We see HSBC as one of the biggest beneficiaries as and when interest rates start to normalise in the Western world," the broker said, estimating that for every 10 basis point increase in HSBC's net interest margin, the group's pre-tax profits would rise by around 8 per cent.
Miners, too, were held back as a waning appetite for risk bore on commodity prices. Vedanta Resources shrugged off the weakness, however, climbing by 6p to 2,680p as traders bought in on the back of a push from Citigroup. Factoring in new commodity prices forecasts, the broker upped the stock to "buy", arguing that Vedanta "not only benefits from the recent doubling of iron ore price but also strong organic production growth in its iron ore division".
Of the losers, the platinum mining group Lonmin was among the weakest, shedding 2.5 per cent or 49p to 1,929p, while Fresnillo and Kazakhmys fell by 17.5p to 816p and by 30p to 1,420p respectively. BHP Billiton , which was the subject of reports suggesting that the recently disclosed SEC anti-corruption investigation involved a former bauxite exploration project in Cambodia, was also lower, losing 20p to 2,098p.
further afield, Dignity, the funeral directors chain, received a boost from Goldman Sachs, whose analysts upped it to "buy", saying that the sell-off in the run-up to and after the company's preliminary results in March had left the stock trading on attractive multiples. "[Dignity] releases its interim management statement on May 10, and we expect this to reflect another solid trading result," Goldman added, helping the stock add 6.5p to 640p.
Elsewhere, there was some strength in Game, the video games retailer which suffered a bruising decline on Wednesday after announcing the departure of its chief executive alongside a slump in profits. Goldman and Seymour Pierce both stuck to their "buy" views, with the former saying that the stock, which edged up by 1.25p to 90.6p last night, "remains inexpensive". The analysts at Execution Noble said "sell", however, highlighting market share data, which indicated that, despite the exit of two of its biggest competitors, "Game's share was flat in 2009 at 34 per cent".