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Market Report: Invesco sell-off is a killer for Rentokil

  • @LauraHChesters

News that Invesco Perpetual is setting free a chunk of shares in Rentokil Initial saw it tumble to the bottom of the mid-tier table yesterday. The fund manager Invesco said yesterday that it will reduce its holding in the pest control specialist from 25 per cent to around 14 per cent and the shares fell the most in two-and-a-half years.

Invesco is selling the stake after its star fund manager Neil Woodford decided to quit after 25 years.

The City has been expecting shares in the companies he has backed to fall. Reports suggested around 10 per cent of funds have been withdrawn by investors since he announced his departure earlier this month.

Rentokil dropped 3.2 per cent at the time, while other companies he invested in – including the defence giant BAE Systems and the power company Drax – all declined on the news.

Invesco hired Deutsche Bank to sell their stake in Rentokil this week and the shares tumbled 7.7p to 104.5p. But even after the sale, Invesco will remain its biggest shareholder.

For the wider market the mood was generally cautious as investors switched to profit-taking after the recent surge in the benchmark index. The FTSE 100 edged back 46.27 points to 6,731.43 but some analysts expected the dip to be temporary.

Mike van Dulken, the head of research at Accendo Markets, said: "We still see a correction as healthy and a pull back to 6,660 wouldn't be disastrous before a renewed attempt at May highs of 6,875 and possibly even all-time highs of 6,950."

The worst performer among the blue chips was the chemicals-maker Croda International, hit by currency weakness in emerging markets. The supplier of chemicals for soaps and detergents reported weaker-than-expected sales growth for the third quarter. Croda followed clients such as Unilever which recently revealed an emerging market slowdown. Croda said significant devaluation of India's rupee and Japan's yen hit its performance and it missed expectations by 5 per cent. Analysts at JPMorgan slashed their price target to 2,350p and the shares tumbled 199p to 2,436p.

Oil major Royal Dutch Shell reported weaker-than- expected third-quarter profits and slipped 117.5p to 2,159.5p.

Keeping Shell and Croda company were miners, as investors became risk-adverse. Chilean-based copper miner Antofagasta's production update was broadly in line with expectations but it declined 42.5p to 855p. The commodity and mining giant Glencore Xstrata's third-quarter production report revealed good volumes in its copper and coal business but it still declined 5.05p to 340p.

A new shareholder for Marks & Spencer was revealed yesterday. Bill Adderley, the co-founder of the homeware chain Dunelm, has been building a stake for the past 18 months and ticked over the 3 per cent threshold this week. M&S added 10.3p to 503.5p.

Brian McArthur-Muscroft, the finance chief at data centre business Telecity, has left ahead of its trading update next week and it was 28p weaker at 762.5p.

Premier Foods said sales of its eight best-selling lines, including Hovis and Mr Kipling, increased 2 per cent to £125.9m in the past quarter. But it wasn't so tasty at its other brands and non-branded items which dragged its underlying sales down 3.2 per cent, and the food producer was 29.5p worse off at 150.5p.

Over on AIM, DiamondCorp updated on its Lace mine in South Africa and said the first sale of diamonds from tailings will be in November. It was 0.125p brighter at 6.75p. Mariana Resources started drilling at its Condor de Oro copper and gold project in northern Peru and rose 0.575p to 3.57p.

Costis Papadimitrakopoulos, the founder and chief executive of mobile software group Globo, bought 150,000 shares at 65p each and it dialled up a 9.75p advance to 68p.