London midday: Footsie flat as markets digest S&P move

16th Jan 2012 11:54

After a stint in the blue, and the red, the Footsie was trading flat by midday on Monday, as the markets digested the S&P move to downgrade nine Eurozone countries on Friday evening. Eyes are on France as the nation looks to issued €8.7bn in government debt today.Standard & Poor's (S&P) "finally" confirmed on Friday night that both France and Austria have lost their coveted AAA ratings, while the credit ratings of seven other Eurozone countries were also hit by a downgrade. Analysts lowered the long-term ratings on Italy, Spain, Portugal and Cyprus by two notches; France, Austria, Malta, Slovakia and Slovenia by one notch. Meanwhile, Moody's has today announced that it will update the market on France's sovereign debt rating outlook in quarter one. S&P was clear in stating that these decisions are "primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the Eurozone." While many headlines are highlighting the French downgrade, Barclays Capital analyst Laurent Fransolet says that this was, to a large extent, already priced into the market. "The Italian downgrade might be key going forward," Fransolet said. "In terms of impact, we would note that if Italy sees a two-notch downgrade from Moody's or a three-notch downgrade from Fitch, it would fall from Barclays linker indices."In domestic news, the Ernst & Young ITEM Club believes the UK is already in a recession and that growth will flat-line this year. The consultancy has slashed its 2012 gross domestic product growth forecast to just 0.2%, from the 1.5% previously estimated. CARNIVAL DROPS AFTER ASSESSING CRUISE SHIP DISASTER Carnival, the FTSE 100 company which owns the Costa Concordia, the cruise ship which grounded off the coast of Italy at the weekend, says the cost of not having the boat in service will be between $85m and $95m. Shares dropped nearly 20% in early trading and were down 15.6% by midday. Carnival is the parent company of Costa Cruises, the operator of the Concordia. The death toll from the damaged ship rose to six on Monday morning, as bodies continue to be recovered from the luxury liner, which hit rocks off the island of Giglio in the Mediterranean on Friday evening. Credit Suisse said the incident will be a "black mark on the cruise industry" as well as a negative headline for Carnival. "While these accidents are extremely rare, the extensive media coverage will likely curtail some booking activity and pressure pricing during the critical wave season," the broker said.Burberry was one of the best performers on the top share index, ahead of a trading statement due out tomorrow. GDP data is also expected out from China tomorrow, a key growth market for the luxury firm. Banking giant RBS was lower on rumours that it is in talks to sell its cash equity and mergers and acquisitions business in the Middle East as part of a global restructuring. Sector peers Barclays and Lloyds were also in the red.Aerospace, defence and energy market engineer Meggitt was rising after being upgraded from sell to neutral by UBS, while distribution and outsourcing firm Bunzl was lower after Credit Suisse cut its rating from neutral to underperform.Pay-TV and broadband supplier British Sky Broadcasting was out of favour, with Nomura highlighting some challenges it may face in 2012, including a FA Premier League rights auction, which could see increased competition from TV networks Al Jazeera and ESPN. MID-CAP MOVERS: ROCKHOPPER JUMPS ON TAKEOVER RUMOURSRockhopper jumped around 10% after the Sunday Times reported that the oil and gas firm was looking for a partner to share development costs for its Falkland Island assets, with reports circulating that this could lead to a takeover from Cairn Energy. The latter's share price, however, fell into the red."We believe Cairn would be a reasonable partner for Rockhopper given the company's proven record of developing oil assets...We believe Rockhopper's fundamentals and in particular the disconnect between the company's stock price and its value creates a compelling case for such rumours," said Merchant Securities.On the FTSE 250, house builder Bovis Homes rose after giving a confident outlook for 2012, while reporting that 2011 profits were in line. Exillon Energy fell, despite a strong start, after increasing daily production in December. Milk producer Robert Wiseman Dairies surged after agreeing to a cash offer from European dairy giant Müller. BCFTSE 100 - RisersPearson (PSON) 1,250.00p +2.71%BT Group (BT.A) 208.10p +2.31%Man Group (EMG) 108.50p +1.40%ARM Holdings (ARM) 582.50p +1.30%Meggitt (MGGT) 369.40p +1.23%GKN (GKN) 198.60p +1.17%Hargreaves Lansdown (HL.) 434.20p +1.09%Shire Plc (SHP) 2,188.00p +1.02%Burberry Group (BRBY) 1,284.00p +1.02%Tate & Lyle (TATE) 692.50p +1.02%FTSE 100 - FallersCarnival (CCL) 1,897.00p -15.61%Capita (CPI) 636.50p -3.27%G4S (GFS) 264.00p -2.19%Vedanta Resources (VED) 1,065.00p -1.84%Lloyds Banking Group (LLOY) 28.98p -1.76%ICAP (IAP) 331.50p -1.54%Cairn Energy (CNE) 287.70p -1.54%Kingfisher (KGF) 248.10p -1.51%Evraz (EVR) 395.60p -1.35%Tullow Oil (TLW) 1,410.00p -1.33%FTSE 250 - RisersPerform Group (PER) 234.80p +6.73%TUI Travel (TT.) 167.00p +3.28%Home Retail Group (HOME) 87.70p +3.18%BBA Aviation (BBA) 187.80p +2.45%Supergroup (SGP) 579.50p +2.39%Spirit Pub Company (SPRT) 44.50p +2.30%Afren (AFR) 112.70p +1.99%Laird (LRD) 156.50p +1.82%Dixons Retail (DXNS) 9.87p +1.81%Rank Group (RNK) 132.00p +1.77%FTSE 250 - FallersInmarsat (ISAT) 390.50p -7.02%Anglo Pacific Group (APF) 262.50p -4.55%Regus (RGU) 87.00p -3.33%Soco International (SIA) 281.40p -3.17%Brewin Dolphin Holdings (BRW) 141.40p -2.62%EnQuest (ENQ) 104.10p -2.44%Exillon Energy (EXI) 264.90p -2.43%Spectris (SXS) 1,447.00p -2.36%Rathbone Brothers (RAT) 1,078.00p -2.36%Phoenix Group Holdings (DI) (PHNX) 535.50p -2.28%