Capital Shopping Centres rises on bid hopes; retailers drop
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — U.K. shares recovered from early losses to trade broadly flat Wednesday as a possible rating downgrade for Spain weighed on banking stocks, while BP PLC and heavyweight pharmaceutical firms rose.
The benchmark FTSE 100 index (UK:UKX 5,895, +3.35, +0.06%) was broadly steady at 5,891.26, as other European stock markets declined after Moody’s Investors Service announced it may downgrade Spain’s Aa1 credit rating. Read more on Europe Markets.
“Jumpy investors will not be pleased at the return of euro-zone fiscal difficulties to headlines, and it remains to be seen whether this news will cut short the Santa rally,” said Ben Critchley, sales trader at IG Index.
Bank stocks declined, with Barclays PLC (UK:BARC 264.25, -7.75, -2.85%) (BCS 16.56, -0.57, -3.33%) , which is particularly heavily exposed to Spain, falling 2.4% and Lloyds Banking Group PLC (UK:LLOY 68.99, -0.35, -0.51%) (LYG 4.28, -0.02, -0.44%) dropping 0.9%.
Royal Bank of Scotland Group (UK:RBS 41.35, +0.01, +0.02%) (RBS 12.89, -0.14, -1.08%) slipped 0.4% after it announced a deal to transfer certain staff and customers of its retail- and commercial-banking operations in China to Singapore’s DBS Group as part of the lender’s long-term plan to reduce its assets.
The pound was also weaker, dropping 0.9% against the dollar to $1.5625.
Mining stocks recovered from early losses to trade mixed and oil heavyweight BP PLC (UK:BP. 476.10, +3.00, +0.63%) rose 0.5%, adding to the gains in the previous session when it was named Credit Suisse’s top long-term pick in the oil sector.
The biggest advancer on the main index was Capital Shopping Centres Group PLC (UK:CSCG 416.00, +19.70, +4.97%) , which rallied 5.5% to 418 pence after U.S. real-estate firm Simon Property Group (SPG 96.56, -1.11, -1.14%) said it had made an indicative proposal to buy the company.
Simon Property, which already holds a 5% stake in CSC Group, had previously said it was interested in a deal, but that any offer would be conditional on CSC scrapping its planned acquisition of the Trafford Centre shopping mall in Manchester, England.
CSC’s share price, however, remained below the 425 pence that Simon Property said it would be prepared to offer, as analysts said a deal would face a number of hurdles.
“The price of 425 pence is higher than we anticipated Simon Property would be prepared to pay, but still may not be sufficient to gain enough acceptances,” said Sue Munden, an analyst at Seymour Pierce.
CSC again rejected the approach, but said it would delay a shareholder vote on the Trafford Centre deal that had been planned for Monday to ensure CSC shareholders can make an informed decision. CSC shares extended their gains after the decision to delay the meeting.
Retail stocks were weaker following poorly received trading updates from Swedish fashion chain Hennes & Mauritz AB (SE:HMB 239.40, -5.10, -2.09%) and Spain’s Inditex SA (ES:ITX 59.40, -3.06, -4.90%) .
Among U.K. retailers, Marks & Spencer Group (UK:MKS 374.00, -2.20, -0.59%) and Next PLC (UK:NXT 2,005, -12.00, -0.60%) both dropped 0.6%.
Pharmaceutical stocks were mostly higher. AstraZeneca PLC (UK:AZN 3,147, +39.50, +1.27%) (AZN 49.50, +0.34, +0.69%) rose 1.4% and GlaxoSmithKline PLC (UK:GSK 1,273, +15.00, +1.19%) (GSK 39.91, +0.05, +0.13%) climbed 1.2%. The gains followed a big rally for Swiss rival Novartis AG (CH:NOVN 56.70, +3.10, +5.78%) after it said it would buy the remainder of eye-care firm Alcon Inc. (ACL 165.30, +2.87, +1.77%) . Read more about the Novartis-Alcon deal.
Novartis also said it would restart its share buyback program as drug companies increasingly move to return cash to shareholders. GlaxoSmithKline is approaching the point where it will resume share buybacks, Reuters reported on Monday, citing an interview with the group’s CEO.
