Coca-Cola HBC leads FTSE lower, but Rio Tinto lends support

Thu Aug 7, 2014 7:51am EDT

* FTSE 100 down 0.2 pct

* BoE holds steady as rates debate heats up

* Coca-Cola HBC hurt by deterioration in Russian market

* Old Mutual weak post results but Rio Tinto helps FTSE

By Tricia Wright

LONDON, Aug 7 (Reuters) - Britain's top shares slipped on Thursday, led down by bottler Coca-Cola HBC and insurer Old Mutual on sobering results, although strong earnings from Rio Tinto gave the market some support.

Coca-Cola HBC, the world's No. 2 bottler of Coca-Cola drinks, sank 3.7 percent after warning that volumes would fall for the rest of the year, citing a "sudden deterioration" in Russia, its biggest market.

More broadly, investors were on edge over the possible impact of tit-for-tat sanctions announced by Russia, introduced after the West penalised it over suspicions that it has supported pro-Moscow rebels in Ukraine.

The FTSE 100 was down 11.42 points, or 0.2 percent, at 6,624.74 points by 1117 GMT, meaning the index has fallen some 3 percent since a peak seen at the end of July.

Some traders, however, felt the index had found a floor around current levels for now.

"They're (investors are) still a bit nervous... but in the short term it's fairly well priced in," Manoj Ladwa, head of trading at TJM Partners, said.

The Bank of England kept interest rates at their record low on Thursday, giving Britain's fast economic recovery more time to build even as differences among its policymakers become more apparent.

The European Central Bank also left interest rates unchanged.

Old Mutual was another big faller, off 2.5 percent after foreign exchange headwinds dampened a headline jump in profit, traders said.

But fellow insurer Aviva climbed 2.7 percent, the top FTSE 100 riser, after unveiling a 4 percent rise in first-half operating profit as its European and UK general insurance businesses built on a strong start to the year.

The index also received support from Anglo-Australian miner Rio Tinto, up 1.7 percent after reporting a 21 percent rise in first-half profit, beating market forecasts.

The miner slashed capital spending and cut costs faster than expected while ramping up iron ore output, prompting a rise that contributed 2.8 points to the benchmark.

"'World Class' is the line CEO Sam Walsh is using to describe the results and the proof is plain to see," said Evan Lucas, analyst at IG. "The results beat on all major comparisons."

Three-quarters of analysts with ratings on the stock believe Rio Tinto is either a "buy" or "strong buy", Thomson Reuters Starmine data showed.

(Additional reporting by Alistair Smout; Editing by Kevin Liffey)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.