Market Report: Miners among sectors down as blue chips suffer

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In a tough day for the blue-chip index, Standard Life found itself among the major fallers as only seven companies on the FTSE 100 managed to post a gain.

The life assurer suffered off the back of a bearish note from Morgan Stanley, which said that the company's relative valuation was "stretched". Analysts from the broker said profitability was "unproven in Standard Life's 'new products'" and that they "believe it will take some time before meaningful profits are generated from its three key UK product platforms".

As a result of the research, Morgan Stanley changed its advice on the firm to "underweight" from "equal-weight" and reduced its target price by 24p to 261p, prompting it to lose 5.8p to 220.1p.

The life assurer was by no means the only faller, as investors looked to the East and the West with trepidation due to fears over Ireland and China. This, along with inflation rising above forecasts to 3.2 per cent in October, led to the top-tier index shedding 138.51 points, closing on 5,681.9.

Despite the country's continuing financial problems, the Irish government has not yet asked for a state bailout and European finance ministers were set to meet yesterday to discuss the situation. Meanwhile, the decision by South Korea to raise its interest rates was shredding nerves as markets worried that China would soon follow suit.

The miners duly suffered, with Kazakhmys and Fresnillo – among a number of companies in the sector to have their recommendation cut by Numis – falling 93p to 1,421p and 92p to 1,361p, respectively.

Another miner down was Xstrata, even though it may have hoped that the announcement it was restarting its Sinclair nickel mine in Australia would have prompted a price rise; instead it dropped 70.5p to 1,311.5p. Meanwhile, BHP Billiton also weakened, losing 88p to 2,318p, as its investors were informed that any additional buyback scheme to the $4.2bn (£2.6bn) one already announced would not take place until next February at the earliest.

Prime Markets decided to wade into the speculation around Invensys, whose chief executive, Ulf Henriksson, was quoted last weekend discussing China Southern Rail as a potential buyer of the firm. The company has denied any approach, and Prime's head of dealing, Richard Curr, recommended "selling the rumour", although he warned that things could change quickly. Traders were certainly cooler on Invensys yesterday, and it slid 17.5p to 330.4p.

One of the few companies on the blue-chip index to actually make a gain was AstraZeneca, after reports emerged that the drug maker was considering selling its Swedish unit, Astra Tech. Shore Capital's Brian White said the news was "unsurprising" and that, if true, "AstraZeneca appears to be following in the footsteps of other major pharma companies which are seeking to benefit from asset disposals to boost their other operating income and cash generation". Traders clearly approved, as it made 12p to close on 3,028p.

Among the stocks on the mid-tier index, the biggest riser was TalkTalk, which last week was the subject of takeover rumours. Yesterday saw the company announce its first-half results with a revenue increase of 24 per cent, and it was boosted 8.9p to 153p.

Meanwhile, speculation that John Wood is in the crosshairs of interested bidders pushed the oil services provider up 8.2p to 486.9p, with market gossips putting Amec and the US firm Halliburton in the frame. While hopes of one deal rose, another was squashed as Sportingbet revealed that Unibet had ended talks over a merger. Despite reports that there were other interested parties, investors pulled out in droves and the online gaming firm plummeted 3.6p to 59.7p.

An interim management statement full of incident failed to prevent Taylor Wimpey edging 0.13p down to 24.82p, as the housebuilder said that it expected full-year profits to come in close to the top of forecasts. It also updated the market with the progress of its debt-refinancing plans, announcing that it had agreed terms with its banks on a credit facility worth £950m, and revealed that its firm's finance director, Chris Rickard, is to depart and will be replaced by Ryan Mangold.

It seemed to be the day for finance directors moving on, as Punch Taverns said that its director was leaving, too. Seymour Pierce was not happy about Phil Dutton finishing next March, saying that there was "no explanation as such for the change", and it advised investors to sell. Descending 7p to 61.1p, Punch wasn't helped by its sector rival Enterprise Inns, which was knocked back 10.3p to 99.3p after ending hopes of a resumption of dividends until 2011.

There was a massive jump on the Alternative Investment Market for ReNeuron, after the biotech company announced the first person has been treated in a groundbreaking trial that involves the injection of stem cells into patients suffering the effects of a stroke. Despite the trial being in an early stage, the Surrey-based company – which developed the cells – jumped more than 60 per cent, climbing 2.95p to 7.85p.

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