* FTSE 100 down 0.4 percent
* Ex-divs take up to 7.09 points off index
* ARM weakens on cautious analyst comment
By Tricia Wright
LONDON, Oct 23 British blue chip shares fell on
Wednesday as investors locked in profits on the FTSE 100's
five-month high, with stocks now trading without the attraction
of their latest dividend posting some of the biggest falls.
Stocks trading ex-dividend, including BAE Systems,
HSBC, Smiths Group and William Hill,
knocked up to 7.09 points off the index in early trade.
The FTSE 100 was down 26.84 points, or 0.4 percent,
at 6,668.82 points by 0741 GMT. It had risen 0.6 percent on
Tuesday to its highest close since late May after a weak U.S.
jobs report boosted expectations that the Federal Reserve would
keep monetary policy ultra-loose for longer.
The blue chip index, which has risen some 13 percent in 2013
helped by the Fed's huge monetary stimulus programme, is
currently trading just 3 percent away from a 13-year peak scaled
"One would suspect that being close to multi-year highs
there's the potential for some investors to take advantage of
that (by locking in profits), at least in the short term," Henk
Potts, market strategist at Barclays, said.
"We think (the Fed is) unlikely to taper the bond-buying
programme in December, and will now wait until March ... longer
term it would be more positive for risk assets if the U.S. was
at the stage where they could start stopping the stimulus
because it would display underlying strength rather than
reliance on artificial stimulus."
Charles Stanley technical analyst Bill McNamara said that
while the UK benchmark is, after nine successive days of gains,
seeing a pull-back, he expected this to be relatively
He said that the highest closing level seen in September, at
6,625, would be the first area of support.
Elsewhere among the fallers, chip designer ARM Holdings
shed as much as 4 percent. Traders cited cautious
analyst comment post-results on Tuesday - including from UBS
which downgraded its rating on the stock to "neutral" from "buy"
- as the catalyst behind further losses.
"We are again faced with the dilemma that we have faced
previously that we have few reasons to change our longer-term
forecasts at this juncture and as such we downgrade our
rating... and wait for a better opportunity as ARM grows into
its multiples," UBS said in a note.
ARM recovered some initial losses, trading 1.2 percent lower
by 0923 GMT.
The stock currently trades on a market-implied five-year
compound annual growth rate of 31.5 percent in its earnings per
share and a forward 12-month price-to-earnings of 19 times,
compared with the FTSE 100 average on 3.9 percent and 13.8 times
Starmine's Valuation Momentum (Val-Mo) model, which analyses
price momentum and analyst revisions and identifies stocks that
are cheap for a reason rather than just undervalued, shows a red
flag on ARM - a potentially bearish signal.
(Additional reporting by David Brett; Editing by Susan Fenton)