FTSE 100 retreats from nine-week high after weak company results

Tue May 6, 2014 12:00pm EDT

* FTSE 100 falls 0.4 percent
    * Barclays slips after Q1 profits drop 5 percent
    * Aberdeen Asset Management down after results
    * Drugmakers retreat as imminent M&A hopes recede
    * Housebuilders recover, helped by Countrywide update

    By Tricia Wright
    LONDON, May 6 (Reuters) - Britain's top share index
retreated from a nine-week high on Tuesday, knocked by weak
results from Barclays and Aberdeen Asset Management
, while falls in drugmakers also took their toll on the
market.
    The blue-chip FTSE 100 index closed down 23.86
points, or 0.4 percent, at 6,798.56 points, after hitting
6,838.17 on Friday, its highest level since late February. The
market was closed on Monday for a public holiday.
    Barclays shed 5.2 percent, the top FTSE 100 faller,
after saying a collapse in investment bank revenue had hit
first-quarter profit and was still hurting income in April. That
 threw a spotlight onto an overhaul of the flagging business due
to be unveiled by the British bank on Thursday. 
    Investment manager Aberdeen Asset Management dropped 2.4
percent on a forecast-lagging 3 percent fall in pretax profit
after clients pulled money out of its core emerging market and
Asian equity funds. 
    "Reporting seasons are now more important than they have
been for many years because the market is at a valuation level
where some earnings growth is priced in. When they miss
earnings, it does matter to the market now," Macquarie
strategist Daniel McCormack said.
    "On a 12- to 18-month view, there is plenty of upside left
in the market because earnings will start to improve, but I
struggle to see a near-term positive catalyst for the market to
push materially higher."
    The pharmaceutical sector was the second biggest drag on the
FTSE 100 - behind banks - after investors who had bet that
Pfizer would step up its efforts to seal a takeover of
AstraZeneca were disappointed, traders said.
    AstraZeneca has rebuffed three approaches from Pfizer. It
said on Friday that the U.S. firm's latest offer of 50 pounds
($84) a share undervalued the company "substantially".
 
    "There's a perception that the markets have priced Pfizer
getting in and doing the deal, and it's probably going to take a
little bit longer than investors had anticipated. So you've got
a little bit of profit-taking in AstraZeneca's shares," CMC
Markets senior market analyst Michael Hewson said.
    AstraZeneca, up some 25 percent since mid-April on
expectations of a Pfizer deal alongside a burst of other pharma
deal-making, fell 2.7 percent to 4,677.5 pence. Shire, which has
risen almost 20 percent over the period, slipped 3.1 percent.
    
    BUILDERS BUOYANT
    Housebuilders limited market losses, reversing recent falls,
with traders citing a bullish trading update from Countrywide
, Britain's largest estate agency. 
    The Thomson Reuters UK Homebuilding index 
has fallen more than 10 percent from a late February peak,
trimming its gains for 2014 to around 4 percent.
    It doubled in value during the past three years, underpinned
by tight supply and UK initiatives to spur the job-intensive
sector, such as the 'Help-to-Buy' mortgage scheme.
    Barclays said the recent selloff had left attractive
valuations.
    "We see strong fundamentals: greater visibility provided by
the extension to the 'Help-to-Buy' scheme; a largely disciplined
land market; and a more supportive planning system," Barclays
said in a note. 
    "Where headwinds exist, notably the threat of rising
interest rates, they remain relatively benign in our view."
    Persimmon topped the FTSE 100 leader board, up 3.8
percent at 1,378 pence as Barclays lifted its target price for
the stock to 1,540 pence from 1,333.6 pence. Blue-chip peer
Barratt Developments rose 1.9 percent, and mid-cap
 Taylor Wimpey climbed 1.8 percent. 
($1 = 0.5929 British Pounds)

 (Additional reporting by Atul Prakash; Editing by Ruth
Pitchford)
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