By Simon Kennedy
LONDON (Dow Jones)--U.K. shares posted modest declines
Wednesday, as weakness for oil producers offset gains for insurers,
while investors surveyed fundraising announcements from several
companies, including home builders Barratt Developments and
Redrow.
Failing to hold early but tentative gains, the benchmark FTSE
100 index slipped 0.1% to 5,139.37, with the market failing to move
much in either direction ahead of a U.S. interest rate
decision.
Oil producers including Royal Dutch Shell , which fell 1.6%,
lost ground after disappointing U.S. inventories data.
Several insurers, however, posted solid gains, helped by a
positive note on the sector from Cazenove, which said improving
fundamentals and a more benign environment for investments among
other factors could provide upside for firms.
Prudential (PUK) rose 4% and Aviva rose 0.1% after the broker
upgraded both insurers to outperform from in-line. Standard Life
rose 1.9%.
Fashion chain Burberry was another gainer, jumping 5.4%
following positive press reports about its show late Tuesday for
London Fashion Week.
Shares in Barratt and Redrow had a volatile day, with both
rising more than 4% at one point after the home builders said they
will sell around 870 million pounds ($1.42 billion) of new shares
mostly to existing investors.
Both firms had been widely expected to raise cash to strengthen
their balance sheets following the slump in the U.K. housing
markets. The total amount being raised is a little more than
analysts had been expecting, but both firms also said they had
renegotiated the terms of their outstanding debt, which helped
boost their shares.
Barratt also said that it swung to a net loss of 468.6 million
pounds in the year to June 30, from a profit of 86.4 million pounds
a year earlier. Total deliveries were down 29%, but the firm said
reservations in the eleven weeks since the end of the fiscal year
have been ahead of its expectations.
Barratt closed 2.7% higher while Redrow fell 2.7%.
"Whilst a rights issue will definitely put the group on a more
stable footing and give Barratt the confidence to go out and
purchase land, at this stage we would continue to prefer Bovis and
Bellway and companies with cash positive balance sheets," said
Panmure Gordon analyst Rachael Waring.
Also on the downside, shares in real estate group Liberty
International dropped 10.1% to 507 pence after selling 56 million
shares at 500 pence each in a deal that will allow it to resume
investment in its regional shopping centers and central London
assets.
The group's investment plans had been on hold for the last year
because of the crisis in financial and property markets.
Yell Group also fell sharply, losing 13.5%, after it said its
proposed new terms to its lenders, including extending its debt
maturity and applying new interest rates to its loans.
In earnings news, video game and hardware retailer Game Group
dropped 0.2%.
The company said its first-half net profit slumped by around
two-thirds to 7.7 million pounds as it suffered from comparisons
with a strong 2008, when Mario Kart, Wii Fit and Grand Theft Auto
IV were released.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274
