London close: Stocks dragged into the red by Barclays



LONDON (ShareCast) - - Osborne names Canadian as new Bank of England chief
- Agreement on Greece a real possibility tonight
- Barclays (LSE: BARC.L - news) leads bank stocks lower

UK equities ended the day firmly lower, with banks weighing heavily on the Footsie (FTSE: ^FTSE - news) after Deutsche Bank AG (Xetra: 514000 - news) and Goldman Sachs (NYSE: GS - news) agreed to sell as many as 303.3m shares in the group at 244p a time - at the lower end of the range they expected to sell at.

Today's big news was of course the appointment of Canada's Mark Carney as the next Governor of the Bank of England.

The appointment of Carney, who is currently Governor of the Bank of Canada, shocked pundits, not least because he ruled himself out of the role in August. Mr. Carney also happens to be the current Chair of the Financial Stability Board (FSB).

Chancellor George Osborne said Carney was, "the outstanding candidate to be Governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job".

Acting as a backdrop, the Institute of Fiscal Studies (IFS (SES: E1:I49.SI - news) ) said the Treasury could have to raise valued added tax (VAT) to 25% as tax revenues falter and the economy continues to struggle. Osborne may also have to abandon one of his fiscal targets - that overall UK debt should be falling in 2015-16, as well as pushing austerity measures into 2018, the IFS report added.

"Since the budget, the outlook for the UK economy has deteriorated and government receipts have disappointed by even more than this year's weak growth would normally suggest," said IFS deputy director Carl Emmerson. "The planned era of austerity could run for eight years - from 2010-11 to 2017-18," he added.

In other news, it was reported today that the public's inflation expectations for the next 12 months fell to 2.8% in November (Xetra: A0Z24E - news) from 3.0% in the previous month, according to a survey by polling company YouGov (LSE: YOU.L - news) .

Tonight's Eurogroup meeting

There can be little doubt that what was forefront and centre on market's minds was tonight's meeting of Eurozone finance ministers (the so-called Eurogroup), with an agreement that would allow for the disbursement of the next tranche of aid to Greece thought to be a real possibility.

FTSE 100 (FTSE Index: EO100.FGI - news) : Qatar takes profits on Barclays

Barclays led the fallers on the top share index. Qatar Holding plans to sell its remaining warrants in the lender, which are worth around £775m, yet it will remain its largest shareholder with a 6.7% stake.

The transaction, which is expected to yield a $280m profit for Qatar, saw both Deutsche Bank AG and Goldman Sachs agree to sell as many at 303.3m shares, equal to £740m, at 244p a time. Although the conversion of the warrants would provide Barclays with £750m, it would dilute other investors' holding in the group.

The news dragged Royal Bank of Scotland (LSE: RBS.L - news) and Lloyds lower.

Aberdeen Asset Management took a hit after Peel hunt downgraded the stock to hold, but increased its target price by 15p to 365p, based on its strong share price outperformance and its sector-leading valuation. The company announced a 15% full year increase in underlying profit before tax, to £347.8m, versus £301.9m a year ago.

Polymetal (MCX: PMTL.ME - news) also fell after it was reported that the group has lost 700 tonnes of gold ore after a cargo ship carrying the metal went missing off the coast off Russia. The company released a statement saying that the responsibility for the cargo "lies with the freight carrier".

Analysts at UBS (NYSEArca: DJCI - news) today issued an upbeat note on shares of British Land (LSE: BLND.L - news) so as to reflect the company's lower risk profile and growing earnings potential.

IAG got a boost from Espirito Santo, which has raised its target price from 100p to 140p, although the broker reiterated its sell recommendation on the stock.

Typically 'safe haven' stocks, British American Tobacco and Imperial Tobacco Group (Dusseldorf: 517719.DU - news) , were both given a boost by the decline seen in banks and across the FTSE in general.

Compass (LSE: CPG.L - news) moved higher after analysts at Nomura raised their target price on the company's shares to 832p (from 800p). "Compass Group (Other OTC: CMPGF.PK - news) 's results encapsulated the key attractions of the investment case: strong turnover growth (5.4%), excellent cash flow conversion and continued margin expansion (+8bp)," these analysts wrote.

FTSE 250 (FTSE: ^FTMC - news) : SDL (LSE: SDL.L - news) warns

Bacon and sausage supplier Cranswick (LSE: CWK.L - news) served up a hefty increase in half year profit, but said higher pig prices during the period were an on-going concern. Pre-tax profit rose 21% to £22.5m for the six months ended September 30th 2012, while revenues climbed 6% to £418.6m.

India-focused Essar Energy (Dusseldorf: 11224817.DU - news) almost doubled revenues in the first half, but saw this wiped out by costs, as well as regulation and coal supply problems in India. Group revenue was up 97% to $12.8bn, driven by the acquisition of the UK Stanlow refinery as well as higher refining revenues in India.

Business, translation and communications software company SDL said it expects a profits shortfall, following a review of the firm, as its struggles against poor sales and marketing execution, as well as the tough economic environment.

Analysts at Citi were of the belief that the results highlighted the difficulties the company was having in transitioning to a technology company. "We would expect consensus for 2012 and 2013 to fall by approximately 7-10% today in 2012 and 2013 [respectively] to reflect the revised guidance," they said.

FTSE 100 - Risers
British American Tobacco (BATS) 3,252.00p +0.87%
International Consolidated Airlines Group SA (CDI (Berlin: CDD.BE - news) ) (IAG) 170.40p +0.83%
BAE Systems (LSE: BA.L - news) (BA.) 312.00p +0.55%
Resolution Ltd. (RSL) 234.90p +0.47%
Imperial Tobacco Group (IMT) 2,495.00p +0.44%
National Grid (LSE: NG.L - news) (NG.) 714.00p +0.42%
Reckitt Benckiser Group (RB.) 3,878.00p +0.41%
Unilever (Frankfurt: A0JNE2 - news) (ULVR) 2,384.00p +0.38%
British Land Co (BLND) 537.00p +0.37%
Pennon Group (Other OTC: PEGRF.PK - news) (PNN) 607.00p +0.33%

FTSE 100 - Fallers
Barclays (BARC) 240.50p -5.39%
Royal Bank of Scotland Group (RBS) 285.10p -3.03%
Lloyds Banking Group (LSE: LLOY.L - news) (LLOY) 45.10p -2.81%
Polymetal International (POLY) 1,074.00p -2.27%
Petrofac Ltd. (PFC) 1,594.00p -2.21%
Kazakhmys (LSE: KAZ.L - news) (KAZ) 679.50p -2.02%
Aberdeen Asset Management (ADN) 336.00p -1.96%
Tullow Oil (LSE: TLW.L - news) (TLW) 1,366.00p -1.94%
Randgold Resources Ltd. (RRS) 6,540.00p -1.73%
CRH (CRH (Xetra: 558474.DE - news) ) 1,111.00p -1.68%

FTSE 250 - Risers
Cranswick (CWK) 812.50p +9.95%
Essar Energy (ESSR) 127.00p +4.87%
Kenmare Resources (Xetra: 877923 - news) (KMR) 31.71p +4.55%
New World Resources A Shares (NWR) 241.20p +3.52%
Brewin Dolphin Holdings (BRW) 183.80p +3.20%
Dixons Retail (Other OTC: DSITF.PK - news) (DXNS) 26.84p +3.19%
NMC Health (NMC (Other OTC: NMCX.PK - news) ) 175.20p +3.18%
PayPoint (Berlin: PAN.BE - news) (PAY) 880.00p +2.68%
CSR (Berlin: CSR.BE - news) (CSR) 358.80p +2.63%
Ted Baker (LSE: TED.L - news) (TED) 1,001.00p +2.14%

FTSE 250 - Fallers
SDL (SDL) 438.50p -14.19%
Centamin (DI) (CEY) 60.60p -6.34%
Supergroup (Xetra: A1CT6Y - news) (SGP (SNP: ^SGPY - news) ) 585.00p -4.80%
Pace (Berlin: PG7.BE - news) (PIC) 177.30p -4.21%
Ocado Group (Berlin: 0OC.BE - news) (OCDO) 71.80p -4.01%
Micro Focus International (MCRO) 564.50p -3.91%
Diploma (LSE: DPLM.L - news) (DPLM) 464.30p -2.93%
Stobart Group Ltd. (STOB) 107.20p -2.90%
Sports Direct International (SPD) 380.50p -2.74%
Menzies(John) (MNZS) 575.50p -2.62%