Government U-turn blow for Firstgroup
TRANSPORT giant FirstGroup lost more than one-fifth of its stock market value yesterday after a Government U-turn dealt a blow to its hopes of running the West Coast franchise.
The FTSE-250-listed company saw shares plunge 21%, or 50.6p, to 193.4p, wiping more than £240 million off its value, following news the Government was pulling its offer due to significant technical flaws in the handling of the bid process.
The top flight closed up 16.4 points at 5825.8, as Wall Street’s Dow Jones industrial average rose 40 points in early trading, after a better-than-expected US services sector survey.
The Institute for Supply Management p ur c hasi ng managers index rose to 55.1, where 50 marks growth, against expectations for 53.1. However, a similar survey for the UK showed the rate of growth in services slowing down.
Britain’s disappointing services performance reined in recent economic recovery hopes, which left the pound at its lowest against the dollar for three weeks, at just under $1.608.
Sterling also fell to €1.245 as the single currency strengthened on hopes that Spain will seek a bailout soon.
Among stocks, the supermarket sector was in focus on the Footsie after figures from Tesco and Sainsbury’s.
The latter’s shares were 2%, or 5.7p, higher at 352.5p after a 1.9% rise in like-for-like sales in the 16 weeks to September 29, compared with 1.4% growth in the 12 weeks to June 9.
The grocer’s update came as main competitor Tesco revealed 0.2% growth in like-for-like sales – also excluding fuel and including VAT – although Tesco’s second quarter covered a different trading period. However, Tesco shares fell 8.8p to 328p after a 12% decline in group pre-tax profits to £1.7 billion in the six months to August 25, driven by a downturn in Asia and Europe. 3631 680 615 1943 93 5691 1633 1727 980 241 1933 1011 741 2711 537 1818 1663 328 570 1505 +301 +25 +21 +65 +27 +161 +43 +45 +231 +51 -505 -6 -29 -93 -181 -57 -5 -83 -15 -33 +9.04 +3.82 +3.54 +3.51 +3.16 +2.98 +2.96 +2.73 +2.46 +2.25 -20.74 -5.58 -3.77 -3.35 -3.33 -3.04 -2.91 -2.60 -2.56 -2.40
Other fallers included support services firm Capita after it revealed another supplier was in talks with the Home Office over a contract to support the Whitehall department’s vetting and barring scheme. The shares fell 12.5p to 763p, a drop of 2%.
Outside the top flight, lowcost airline easyJet jumped 4%, up 21p to 615p, after it upped profits guidance for the year to September 30 to between £310 million and £320m.
Stagecoach, which has a 49% stake in Virgin Rail Group, closed up 5.5p at 288.8p, while Southern operator Go-Ahead was 2p higher at 1343p.
The biggest Footsie risers were International Consolidated Airlines Group up 4.7p to 163.7p, Arm Holdings up 12p to 589p and Centrica 6.2p ahead to 334p. WALL Street ended modestly higher yesterday on strongerthan-expected US labour and service-sector data, but the Dow industrials were hobbled by a slide in Hewlett-Packard.
Shares of Hewlett-Packard dropped sharply after the company warned of a darker outlook for 2013 earnings, reflecting slow progress on chief executive Meg Whitman’s turnaround plan.
The three major US stock indices, which initially got a modest lift from the positive data, came off their highs by late afternoon trade on lingering concerns about the global economy. A gloomier outlook in China and Europe weighed on commodity prices and hit energy and materials shares.
“The ADP National Employment Report numbers were good and the services index was good, but we are missing the big catalyst to keep the market up,” said Jack De Gan, principal and senior advisor at Harbor Advisory in Portsmouth, New Hampshire.
“The next big catalyst will be Friday’s employment numbers, if we don’t get any news out of Europe on the progress of Spain’s bailout before that.”
The Dow Jones industrial average gained 12.25 points, or 0.09%, to 13,494.61, while the Standard & Poor’s 500 index advanced 5.24 points, or 0.36%, to 1450.99, and the Nasdaq Composite Index rose 15.19 points, or 0.49%, to 3135.23.