London midday: Stocks fall as Fitch downgrades Greece

22nd Feb 2012 11:47

- Fitch downgrades Greece from 'CCC' to 'C'.- MPC divided on level of QE.- Vedanta pulls back after yesterday's strong surge.UK stocks fell further into the red by midday after Fitch downgraded Greece's sovereign debt rating. While the decision was unarguably crucial to help the heavily-indebted nation avoid a near-term disorderly default, doubts still remain over the longer-term outlook for Athens. Eurozone finance minsters have granted Greece its next €130bn in aid, a move that was crucial to help the heavily-indebted nation avoid a near-term disorderly default. However, the market reaction to the long-awaited deal was rather muted though - the Footsie fell 0.29% yesterday - with doubts still remaining over the nation's longer-term outlook. Bank of England policy-maker Charlie Bean last night said that while the Greek agreement is "welcome", there still remains "a possibility that events could unfold in a disorderly and damaging fashion at some stage in the future." Fitch Ratings has today downgraded Greece's long-term foreign and local currency issuer default ratings (IDRs) from 'CCC' to 'C' following yesterday's bailout deal. "Fitch considers that the proposal to reduce Greece's public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country's IDR being lowered to 'Restricted Default' ('RD') upon completion."In domestic news, minutes of the Monetary Policy Committee (MPC) meeting are out and they show that while members voted unanimously to keep interest rates at 0.5%, two members (Posen and Miles) argued in favour of increasing its asset purchase programme by £75bn, as opposed to the £50bn finally approvedMeanwhile, the HSBC China purchasing managers' index (PMI) for the month of January rose to 49.7 points, above the reading of 48.8 seen in the month before, according to preliminary data. However, the new export orders sub-index is said to have changed direction and begun to contract.VEDANTA PULLS BACK AFTER YESTERDAY'S STRONG SURGEVedanta Resources was leading the decline on the FTSE 100, falling over 5%, pulling back after yesterday's 7% surge on the back of speculation that it is looking to merge its two Indian subsidiaries, Sterlite and Sesa Goa. Credit Suisse has said today that "any progress on restructuring or or minority buy-outs would be a strong positive"but any such move wouldn't be easy. The broker highlighted Vedanta's attempt in 2008 to restructure KCM and Sterlite which met "significant resistance" and did not complete.Shares in AIM-listed Cove Energy jumped after Anglo-Dutch integrated oil company Royal Dutch Shell launched a bid of 195p per share. The deal values the east Africa-focused company at £992.4m, a 73.3% premium to the closing price of 112.5p on January 4th (the last day before Cove put itself up for sale). Merchant Securities says that the bid is a strong read-across for companies with assets in similar geographies to Cove, such as Rockhopper Exploration and Ophir Energy, both of which were rising strongly today. Consumer packaging firm Rexam was a high after it saw underlying profits growth race ahead of sluggish sales growth on the back of a better than expected performance in its Beverage Cans business, primarily in Europe. Cillit Bang maker Reckitt Benckiser was one of the heaviest fallers after going ex-dividend today. Banking giant Barclays and cruise operator Carnival were also lower after trading without the right to their latest quarterly dividends. FTSE 250: GALLIFORD TRY, HAYS, LOGICA RISE STRONGLY EARLY ON Housebuilding and construction firm Galliford Try doubled its interim dividend and delivered strong profit growth. Pre-tax profit rose to £32.2m for the half year ended 31 December 2011 from £17m the same time a year earlier. Group revenue climbed to £746.8m from £575.9m previously. Recruitment firm Hays jumped despite paring its dividend to 0.83p from 1.85p per share the year before. Nevertheless, net fees in the second half of 2011 rose 15%, or 11% in a like-for-like (LFL) basis to £373.8m from £326.1m at the half-way stage in 2010. After a couple of warnings last year about weakening revenues it was with some relief that Logica, a provider of computer programming contractors, said its 2011 results were in line with guidance it issued in mid-December.BCFTSE 100 - RisersRexam (REX) 397.70p +3.46%Meggitt (MGGT) 389.90p +2.42%Capita (CPI) 657.50p +1.70%Smiths Group (SMIN) 1,064.00p +1.62%Petrofac Ltd. (PFC) 1,584.00p +1.15%Polymetal International (POLY) 1,055.00p +0.96%Lloyds Banking Group (LLOY) 36.09p +0.95%BAE Systems (BA.) 323.50p +0.90%Diageo (DGE) 1,495.50p +0.81%Essar Energy (ESSR) 123.90p +0.73%FTSE 100 - FallersVedanta Resources (VED) 1,383.00p -4.82%International Consolidated Airlines Group SA (IAG) 165.20p -2.77%Marks & Spencer Group (MKS) 346.90p -2.25%Reckitt Benckiser Group (RB.) 3,501.00p -2.15%Carnival (CCL) 1,901.00p -2.11%Eurasian Natural Resources Corp. (ENRC) 710.00p -1.80%Vodafone Group (VOD) 172.70p -1.76%Evraz (EVR) 405.80p -1.67%Tesco (TSCO) 317.50p -1.61%Anglo American (AAL) 2,674.00p -1.53%FTSE 250 - RisersGalliford Try (GFRD) 553.00p +10.38%Ophir Energy (OPHR) 400.00p +9.44%Hays (HAS) 87.70p +8.27%Soco International (SIA) 334.70p +5.72%Logica (LOG) 85.65p +5.22%Travis Perkins (TPK) 1,060.00p +4.85%Devro (DVO) 298.90p +4.73%Barratt Developments (BDEV) 135.20p +4.24%Gem Diamonds Ltd. (DI) (GEMD) 242.30p +3.86%Smith (DS) (SMDS) 172.50p +3.54%FTSE 250 - FallersDrax Group (DRX) 500.50p -3.47%Supergroup (SGP) 541.00p -3.05%Unite Group (UTG) 185.00p -2.99%Domino's Pizza UK & IRL (DOM) 462.10p -2.98%Home Retail Group (HOME) 105.80p -2.94%Kenmare Resources (KMR) 59.70p -2.93%BBA Aviation (BBA) 203.20p -2.59%TUI Travel (TT.) 202.40p -2.36%CSR (CSR) 254.90p -2.30%Aquarius Platinum Ltd. (AQP) 143.40p -2.18%