* 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 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
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
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
"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
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.