* FTSE 100 down 1.6 percent
* Aberdeen leads emerging market sell-off
* Pearson hurt by downgrades after profit warning
By Tricia Wright
LONDON, Jan 24 Britain's top shares sank to a
five-week closing low on Friday, with stocks exposed to emerging
markets feeling the biggest losses, knocked by a rout in Latin
Aberdeen Asset Management shed 5.7 percent, the FTSE
100's top faller, while peer Ashmore was among
the steepest FTSE midcap decliners, off 5.3 percent,
suffering from their heavy exposure to emerging markets after
Argentina's central bank gave up its battle against the
"Obviously the market is separating the wheat from the chaff
- Aberdeen Asset Management has got huge emerging markets
exposure," Ed Woolfitt, head of trading at Galvan, said.
"I won't be charging in right here, right now, but if we
find support (around) these levels over the next day or two,
this would be a good buying signal for the UK equity market."
The FTSE 100 closed down 109.54 points, or 1.6
percent, at 6,663.74 points, its lowest close since Dec. 20 and
its biggest one-day percentage drop this year.
The index, which shed 0.8 percent on Thursday, hit by
disappointing data from the United States and China, is now
trading in negative territory for the year - down 1.3 percent.
Credit checking firm Experian, brewer SABMiller
and bank HSBC which, according to index
provider MSCI, feature among the European blue chips with the
biggest exposure to Latin America, saw respective losses of 4.6
percent, 3 percent, and 2 percent.
It was a quiet day for corporate earnings. Pearson
dropped 1.7 percent, extending the previous session's falls, as
analysts cut their target prices for the publisher following
Thursday's profit warning.
Despite this, and warnings from other firms including oil
major Shell as the European reporting season gradually
gets under way, some investors take the view that the earnings
will justify high valuations after a strong 2013.
"We do think that the earnings will come through ...
(Valuations are) only lofty compared to the last five years
which could be the worst in most people's careers," said Peter
Sullivan, head of European equity strategy at HSBC.
"We're expecting double-digit earnings growth this year and
next. How can we see that when the UK economy is only just
emerging from recession? I think the key is that momentum of
economic growth is positive across the world."
The FTSE 100 currently trades at 13 times 12-month forward
earnings - the highest since late 2009 and far above the 5-year
average of 10.8 times, Thomson Reuters Datastream shows.