August 12, 2014 / 7:44 AM / 5 years ago

FTSE held back by growing Ukraine tension; Prudential lends support

LONDON (Reuters) - Britain’s top shares were pegged back on Tuesday by tension between the West and Russia over Ukraine, although robust results lifted insurance and pensions group Prudential.

The London Stock Exchange is seen during ther morning rush hour in the City of London April 11, 2011. REUTERS/Toby Melville

A convoy of 280 trucks that Russia said were carrying humanitarian aid for Ukraine set off on Tuesday, amid Western warnings to Moscow against using help as a pretext for an invasion. Ukraine also reported that Russia had massed 45,000 troops on its border.

Evidence that Ukraine was affecting Germany, Europe’s biggest economy, came from a decline in the ZEW survey on investor morale, the think tank said.

The FTSE 100 closed down 0.40 of a point - flat in percentage terms - at 6,632.42 points, after gaining 1 percent on Monday.

But Prudential advanced 2.2 percent after it reported a 17 percent rise in first-half operating profit and raised its interim dividend by 15 percent. Fee income from its U.S. business and better sales for health and protection products in Asia boosted the results.

“This is a particularly impressive performance given the tough forex and political headwinds that the group has had to contend with in H1 2014,” Shore Capital said in a note.

It repeated its “buy” rating on the stock, echoing the view in the broader market; of the analysts with ratings on the stock, almost 90 percent reckon Prudential is either a “buy” or a “strong buy”, according to Thomson Reuters Starmine.

Concerns about Russia’s involvement in Ukraine hampered the UK benchmark. Trading volumes were thin, at 68 percent of the 90-day daily average - a product of the summer lull and investor reluctance to place big bets amid the turmoil in Ukraine and the Middle East.

“Worth staying on the sidelines for now and see how the geopolitical situation develops,” said Lex van Dam, a hedge fund manager at Hampstead Capital.

Hargreaves Lansdown was the worst FTSE 100 performer in percentage terms, falling 2.9 percent after investment bank UBS opened coverage of the stock with a “sell” rating.

The FTSE 100 hit a peak of 6,894.88 points in mid-May, which marked its highest level since December 1999. It has since retreated and is down 1.7 percent since the start of 2014.

Additional reporting by Sudip Kar-Gupta; Editing by Alison Williams

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