Earnings concerns keep FTSE 100 under pressure
* FTSE 100 down 32.89 points at 6,690.57
* Intertek falls on outlook concerns
* Ichan warns on stock markets and earnings
* EasjJet rises as it powers ahead of Ryanair
By David Brett
LONDON, Nov 19 (Reuters) - Testing firm Intertek led the FTSE 100 lower on Tuesday on concerns over a slowdown in its business, while doubts linger more broadly over corporate earnings and whether they are doing enough to justify the recent equity market rally.
By 1141 GMT, London's blue chip index was down 32.89 points, or 0.5 percent at 6,690.57, erasing the previous session's gains, albeit in light volumes. The index traded just 22 percent of its 90-day daily average.
Intertek, a company specialising in safety and quality tests, fell 4.2 percent to the bottom of the FTSE 100 after saying says that headwinds experienced in the first-half of the year have continued into the second half.
In response, Shore Capital kept a "sell" recommendation on Intertek shares, arguing that the company may have more downgrades to forecasts.
In a results heavy session, British engineering company Smiths Group slipped 2.7 percent after reporting an inline trading update. Bookie William Hill shed 1.3 percent with traders citing a read across from disappointing results for peer Paddy Power.
Energy services firm Petrofac fell 2.1 percent, extending the previous session's falls, as brokers cut ratings and forecasts after the company warned on its outlook on Monday.
Influential activist investor Carl Icahn sounded a cautious warning on stock markets at a Reuters Investment Summit on Monday. He envisaged a "big drop" because earnings at many companies are fueled more by low borrowing costs than by management efforts to boost results.
Valuations on UK equities are now above long-term averages, having gained 14 percent in 2013 on the back of the huge quantities of cash that major central banks have pumped into the financial sector.
UK stocks trade 5 percent above their 10-year average at 12.66 times projected 12-month earnings at a time when earnings forecasts continue to be downgraded, according to figures from Datastream.
Nearly two-thirds of European companies have missed revenue expectations in the current quarter, while 48 percent have missed forecasts at the profit level, according to another data provider Starmine.
"Traders are wary that the markets are very toppy up here and a few analysts have mentioned that they are getting cautions of equity at these levels, so investors may be using this as an excuse to lock in some profits and close some positions," Mark Ward, head of trading at Sanlam Securities, said.
Citigroup's equity strategists argued that while it expected companies to remain vulnerable to earnings downgrades, the broader stock market may still be able to continue its rally, given the support central banks continue to give to banking sector liquidity and an improving economic backdrop.
British budget airline easyJet rallied 3 percent after it underlined its growing advantage over struggling Irish rival Ryanair, reporting annual profit at the top end of forecasts and returning cash to shareholders.
British engineering firm Amec rose 1.8 percent after saying trading had been boosted by strong performances in the UK North Sea and the U.S. Gulf of Mexico.
Technical analysts said the FTSE has support near the trendline of rising lows from Nov. 13 at 6,690, although the index still needs 6,695 to hold and a break above 6,725 before the uptrend can resume. It hit a 13-year closing high of 6,840 in May.
The focus for the rest of the day will be a speech from Fed Chairman Ben Bernanke in Washington. investors will be looking for clues from Bernanke about when they can expect the first round of tapering from the Fed, particularly, whether it is possible in December.
Traders said any suggestion that this is likely will probably be met with further selling in the coming days.