FTSE slips from 5-yr highs on companies trading ex-dividend

Wed Mar 13, 2013 5:44am EDT

* FTSE 100 down 0.6 percent

* Ex-divs knock 10.7 points off index

* Prudential top riser, pays bumper dividend

By Tricia Wright

LONDON, March 13 (Reuters) - Britain's top shares slipped on Wednesday as investors locked in profits on the FTSE 100's five-year highs, with stocks now trading without the attraction of their latest dividend posting some of the biggest falls.

Ex-dividend stocks accounted for around a quarter of the FTSE 100's decline, with British American Tobacco , Hargreaves Lansdown, Land Securities , Meggitt, Serco and Standard Chartered knocking a hefty 10.71 points off the index.

The UK blue chip index was down 39.14 points, or 0.6 percent, at 6,471.48 by 0912 GMT, having ended the previous session up 0.1 percent at 6,510.62, marking its highest close since late 2007, with banks the biggest fallers on Wednesday.

"The fundamentals still remain supportive, but we must remember that stock markets don't go up in straight lines so we wouldn't be surprised if there's a pullback in the short-term," Henk Potts, market strategist at Barclays, said.

"Investors should use any weakness to take advantage of an asset class that's going to outperform longer-term."

Craig Erlam, market strategist at Alpari, reckoned the index could dip as far as 6,400 before continuing its push higher, targeting 6,610 and then 6,750.

Standard Chartered led the market lower with a 3.5 percent fall, taking 4.8 points off the index, after trading ex-dividend and as Berenberg Bank cut its recommendation on the Asia-focused bank to "sell" from "hold", citing valuation grounds.

Over half of the share price drop - equivalent to 2.97 points of FTSE points, was accounted for by the shares trading ex-dividend. But they fell further after Berenberg warned: "Current valuations do not adequately reflect the risks of rising provisions, revenue headwinds from regulation/size and potential capital dilution."

A recommendation downgrade also weighed on Capita, off 2.4 percent, with UBS lowering its rating on the outsourcing firm to "neutral" in the wake of its recent results, with the investment bank saying improved fundamentals are now priced in.

G4S was a big faller, off 3.4 percent despite posting results that were well-received by analysts, having seen a strong run in the share price, up around 16 percent in 2013 against a near 10 percent rise on the FTSE 100 over the period.

The security group posted a 6 percent rise in annual profit, as emerging markets growth helped soften the blow of an Olympics staffing blunder that weighed in 2012.

Describing the results as decent, Investec Securities repeated its "buy" rating on the stock.

"The outlook strikes a cautious tone around Europe, but organic growth feels on a more even footing, with growth supported by developing markets," it said in a note.

Insurer Prudential bucked the weak market trend, up 2.1 percent and topping the FTSE 100 leader board, after raising its dividend by a bigger-than-expected 16 percent, a contrast to dividend cuts from rivals Aviva and RSA.

The bigger payout reflected a 25 percent jump in Prudential's 2012 operating profit to 2.53 billion pounds ($3.77 billion), ahead of the 2.33 billion forecast by analysts.

Of the 77 percent of STOXX Europe 600 companies to have posted results, 60 percent have beaten or met forecasts, according to Thomson Reuters Starmine data. ($1 = 0.6718 British pounds) (Editing by Hugh Lawson)