FTSE held back by growing Ukraine tension; Prudential lends support

Tue Aug 12, 2014 12:21pm EDT

* FTSE 100 steady following Monday's 1 pct bounce
    * Prudential gains after H1 profit rise, dividend hike
    * Ukraine conflict weighs on sentiment
    * UBS opens Hargreaves Lansdown coverage with "sell" rating

    By Tricia Wright
    LONDON, Aug 12 (Reuters) - Britain's top shares were pegged
back on Tuesday by tension between the West and Russia over
Ukraine, although robust results lifted insurance and pensions
group Prudential.
    A convoy of 280 trucks that Russia said were carrying
humanitarian aid for Ukraine set off on Tuesday, amid Western
warnings to Moscow against using help as a pretext for an
invasion. Ukraine also reported that Russia had massed 45,000
troops on its border. 
    Evidence that Ukraine was affecting Germany, Europe's
biggest economy, came from a decline in the ZEW survey on
investor morale, the think tank said. 
    The FTSE 100 closed down 0.40 of a point - flat in
percentage terms - at 6,632.42 points, after gaining 1 percent
on Monday.
    But Prudential advanced 2.2 percent after it
reported a 17 percent rise in first-half operating profit and
raised its interim dividend by 15 percent. Fee income from its
U.S. business and better sales for health and protection
products in Asia boosted the results. 
    "This is a particularly impressive performance given the
tough forex and political headwinds that the group has had to
contend with in H1 2014," Shore Capital said in a note.
    It repeated its "buy" rating on the stock, echoing the view
in the broader market; of the analysts with ratings on the
stock, almost 90 percent reckon Prudential is either a "buy" or
a "strong buy", according to Thomson Reuters Starmine. 
    Concerns about Russia's involvement in Ukraine hampered the
UK benchmark. Trading volumes were thin, at 68 percent of the
90-day daily average - a product of the summer lull and investor
reluctance to place big bets amid the turmoil in Ukraine and the
Middle East.
    "Worth staying on the sidelines for now and see how the
geopolitical situation develops," said Lex van Dam, a hedge fund
manager at Hampstead Capital.
    Hargreaves Lansdown was the worst FTSE 100
performer in percentage terms, falling 2.9 percent after
investment bank UBS opened coverage of the stock with a "sell"
rating. 
    The FTSE 100 hit a peak of 6,894.88 points in mid-May, which
marked its highest level since December 1999. It has since
retreated and is down 1.7 percent since the start of 2014.


 (Additional reporting by Sudip Kar-Gupta; Editing by Alison
Williams)