By Michael Taylor
LONDON, March 31 (Reuters) - Britain's leading share index
reversed larger losses by mid-session on Monday as gains in oil
shares and bid target Friends Provident <FP.L> countered losses
in heavyweight Vodafone <VOD.L> after a broker downgrade.
At 1115 GMT the FTSE 100 <> was 5.8 points, or 0.1
percent lower at 5,687.1, but well off its day's low of 5,585.6.
The FTSE is down almost 12 percent for the year on concerns
about a U.S. recession, and is on course for its worst quarter
since the third quarter of 2002 and its third consecutive
quarter of losses.
Vodafone was a standout loser, falling 3.6 percent after
Morgan Stanley downgraded the shares to "underweight" from
"overweight" and cut its price target to 170 pence from 215
pence.
British broadcaster ITV <ITV.L> fell 6.8 percent to 63.3
pence and topped the blue-chip losers' list after UBS downgraded
the stock to "sell" from "neutral" and lowered its price target
to 60 pence from 70 pence.
"There was a time when the last day of the month and quarter
would almost guarantee you a positive return," said Tom
Hougaard, chief market strategist at City Index Markets.
"It doesn't look like Wall Street is off to the races today.
Europe has reacted negatively to the weak Asian markets, and
Wall Street looks set to open lower again, after Friday's
unexpected sell off late in the day."
British Airways <BAY.L> shed 1.3 percent after a downgrade
from Goldman Sachs and a warning that travellers at Heathrow
airport's new Terminal 5 in London face more delays from
teething troubles with the computerised baggage handling system.
Oil major BP <BP.L> added 0.4 percent and rival Royal Dutch
Shell <RDSa.L> climbed 1.3 percent after a series of broker
upgrades helped support the sector.
Britain's biggest retailer Tesco <TSCO.L> was down 3.2
percent after a weekend newspaper reported it had halted the
rollout of Fresh & Easy, its chain of U.S. convenience stores,
while it reviews the performance of the start-up business. Tesco
declined to comment.
Banking tracked back from earlier losses to offer a somewhat
mixed picture, with HBOS <HBOS.L> gaining 3 percent, while
Standard Chartered <STAN.L> fell 1.8 percent.
HSBC <HSBA.L> was 0.8 percent higher. Europe's largest
lender launched private banking services in China as it joined
other foreign banks in targeting the country's fast-growing
market for services to wealthy clients. []
But with little on the corporate calendar this week, eyes
turned to a busy week on the U.S. economic calendar.
The New York NAPM index of regional business activity for
March is due at 1300 GMT and the Chicago manufacturing PMI, also
for March, at 1345 GMT. The Dallas Fed releases its March Texas
manufacturing index at 1430 GMT.
"We are now on the last day of the quarter (so) you're going
to have a lot of position squaring -- a lot of investors who
aren't particularly willing to take a view today," said Richard
Hunter, head of UK equities at Hargreaves Lansdown.
"From that basis if we are seeing slightly lower volumes,
any move is going to be exacerbated."
FRIENDS PROVIDENT
Insurer Friends Provident gained 3.4 percent to top the FTSE
100 leaderboard after it rejected a 3.5 billion pound ($7
billion) cash takeover offer from U.S. private equity firm JC
Flowers because it said the bid significantly undervalued the
company. []
Among pharmaceuticals, AstraZeneca <AZN.L> climbed 2.3
percent after it decided to stop a clinical trial of its
blockbuster cholesterol-lowering Crestor early because of the
clear benefits of the medicine compared to placebo.
The news is a boost for Crestor, the group's third biggest
seller, in an increasingly competitive anti-cholesterol market.
It comes as doubts deepen over the value of Vytorin, a rival
drug from Schering-Plough Corp <SGP.N> and Merck & Co <MRK.N>.
(Additional reporting by Rebekah Curtis; editing by Sue
Thomas)
