By Sarah Turner
LONDON (Dow Jones)--Barclays led the British banking sector
lower on Tuesday, with the lender losing ground after Abu Dhabi's
International Petroleum Investment Company revealed a plan to sell
1.3 billion shares in the lender.
Barclays (BCS) shares dropped 13.5% to 273 pence after
International Petroleum Investment Co. said it's going to sell 1.3
billion shares in the bank, which were worth around 4.1 billion
pounds ($6.7 billion) at the previous day's closing price.
"The decision to dispose of some of its interests in Barclays
reflects the focus of IPIC's long-term investment strategy on
hydrocarbon-related opportunities," said Khadem Al Qubaisi,
managing director of International Petroleum Investment Co.
Analysts at Nomura in a note to clients: "The sale of a
significant stake by IPIC will come as a considerable surprise to
the market and the reported price of 267 pence, or a 15% discount,
reflects this and the greater volatility in current markets."
Still, Barclays and other banks rose sharply on Monday, helping
to pull the top share index to a closing level not seen since Jan.
7, as investors eyed data that provided more signs that the global
economy is stabilizing.
Other lenders giving back some ground on Tuesday included Lloyds
Banking Group (LYG), down 4.1%, and Royal Bank of Scotland, down
5.2%.
Overall, the FTSE 100 index retreated 0.7%, or 29.17 points, to
4,477.02.
"Once again the 4,500 level is proving to be a barrier to the
FTSE 100," noted strategists at IG Index. "It is definitely
starting to look a little tired up at these levels and at the
moment it is difficult to see what the catalyst to kick off another
major surge higher is going to be," they added.
However, shares of home-improvement retailer Kingfisher rose
3.8% in top index action on Tuesday.
The firm's total retail sales rose 9.6% to 2.6 billion pounds in
the 13 weeks to May 2. Outdoor seasonal product sales were boosted
by more favorable weather in the U.K. and France and a later Easter
compared to last year. Non-seasonal sales continued to decline, the
firm noted.
Retail profit rose 40.1% to 128 million pounds, primarily due to
a doubling of profit at B&Q stores in the U.K. following higher
sales volumes and continuing margin and cost improvements.
"Overall the U.K. generated 61 million pounds earnings before
interest and tax, an excellent result and way ahead of
expectations. Although management cautions about the seasonal
weather uplifts unlikely to be repeated we believe that May has got
the second-quarter period off to a cracking start," said analyst
Singer Capital Markets analyst Matthew McEachran in a note.
Shares of Home Retail, which owns the Homebase chain of
home-improvement stores, rose 2.9%, while Travis Perkins, which
owns the Wickes chain, climbed 3.1% outside the top index.
Shares of Plant Health Care rose 2.9%, also outside the top
index. The firm said that it has received an order from Monsanto
Co. (MON).
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274