LONDON (Reuters) - Britain’s FTSE 100 edged lower on Monday, with weakness in miners and retailers at the start of the first full week of 2014 offsetting a rally in RSA Insurance (RSA.L) on expectations it will avoid further writedowns.
RSA rose 5.5 percent after the Sunday Telegraph reported that a probe into its Irish business was expected to conclude that accounting problems there were an isolated incident, and that no further writedowns will be needed. Results from the probe by PWC are due on January 9.
“There are people out there that were extrapolating from Ireland - which is 3 percent of the group’s business - to some of the bigger regions, and if the PWC reviews includes the words isolated incident .... then for those people it would be a good respite for them,” said Eamonn Flanagan, analyst at Shore Capital, who rates the stock “hold”.
“It’s a positive ‘hold’ rather than a negative ‘hold’ because I do think that the options for the group are healthier than some in the market believe.”
Traders said the stock also got a fillip from a UBS note raising the price target on the stock and adding it to the bank’s most preferred list.
However, after the broader FTSE 100 was down 4.76 points or 0.07 percent at 6,725.91 points by 0848 GMT .FTSE, with weakness in retailers and miners getting the upper hand after a jittery start to the session.
Miners were hit by fresh signs of economic weakness in top metals consumer China. Surveys showed growth in the Chinese service sector activity slowing in December, mirroring the trend seen in manufacturing.
Randgold Resources fell 1.8 percent RRS.L, while heavyweight Rio Tinto dropped 1.1 percent (RIO.L).
Retailers also weighed on the FTSE 100, with Marks & Spencer down 1.8 percent to 435.98 pence (MKS.L) on concerns that a trading update later this week may reveal weak Christmas sales.
“With the technical outlook deteriorating rapidly and with heavy negative media sentiment, I wouldn’t be surprised to see further moves lower: 416 pence, which is the cycle low from June last year should act as support,” said Jordan Hiscott, sales trader at Gekko Global Markets.
Editing by Alison Williams