February 9, 2018 / 10:12 AM / 3 months ago

FTSE 100 falls as investors lick wounds after turbulent week

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* FTSE 100 down 0.4 pct

* Financials weigh but cyclicals support index

* Hogg Robinson surges 49 pct on AmEx takeover offer

* Trinity Mirror jumps after deal to buy Express titles

* China, EM funds fall after sell-off strikes Asian stocks

By Helen Reid

LONDON, Feb 9 (Reuters) - British shares fell modestly on Friday in calmer trade at the end of a turbulent week which saw the FTSE 100 sink to a 13-month low as a sell-off struck global markets.

The FTSE 100 was down 0.4 percent by 0950 GMT, having earlier this week suffered its worst losses since the Brexit vote. The index was down 8 percent from its record high hit on Jan 12.

Investors mulled the biggest question facing the market: did this week’s correction mark the start of a bear market?

“If we look at other indicators it doesn’t look the case,” said Rory McPherson, head of investment strategy at Psigma Investment Management in London.

“Interbank lending rates are still pretty low, credit spreads have moved up slightly from record lows but haven’t blown out, and earnings season is coming along pretty well,” he added, saying the sell-off was caused by equity markets being overbought and slightly over-valued.

Financials were the biggest weight on the index on Friday, reflecting a drop in banking stocks across European markets.

Investors said however that the Bank of England saying on Thursday it would raise rates sooner and by more than it thought three months ago would probably lend support to domestic bank stocks in the medium-term.

Chemicals firm Johnson Matthey was the biggest faller, down 4.4 percent after rival Umicore raised 892 million euros to fund capacity growth.

Merger and acquisition news shook up the small-cap market.

Trinity Mirror shares jumped 6.6 percent after the publisher of the Daily Mirror agreed to buy rival titles the Daily Express and Daily Star in a takeover bringing together tabloids from opposite ends of the political spectrum.

Shares in British business travel company Hogg Robinson shot up 49 percent, leading the small-cap index by far after saying it had received a takeover offer from American Express’s global business travel unit, and had agreed to sell its payments technology business to Visa.

Materials and industrials stocks were the biggest boosts to the FTSE 100. Miners Rio Tinto and Anglo American led sector gains, up 1.5 percent each.

“An encouraging sign is that domestic and cyclical stocks have held up really well in this sell-off,” said McPherson, adding that more expensive parts of the market, like technology and healthcare, had been the worst hit.

Valuations across European stocks and UK stocks were sent down by this week’s falls. Volume has been heavy during the week, with some 1.4 billion UK shares trading hands on Tuesday, the most in nearly five months.

“The UK market trades on around 14 times next year’s earnings, which is good value,” said McPherson.

Also weighing on the market were listed funds exposed to China and emerging markets, suffering after a dramatic sell-off in Asian shares overnight sent Chinese equities to multi-month lows.

Shares in JPMorgan Chinese Investment Trust fell 4.4 percent, one of the worst performers on the small-cap index. Fidelity’s China Special Situations Fund fell 2.4 percent on the FTSE 250, with Schroder’s Asia Pacific fund down 2.3 percent. Emerging markets fund manager Ashmore also fell 2.8 percent.

Reporting by Helen Reid; Editing by Peter Graff

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