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FTSE retreats from 3-week high, "ex-div" firms weigh
August 20, 2014 / 11:21 AM / 3 years ago

FTSE retreats from 3-week high, "ex-div" firms weigh

* FTSE 100 edges lower after 5-day winning run

* Ex-dividends take around 11 points off the index

* MPC minutes show two members voted for tightening

By Atul Prakash

LONDON, Aug 20 (Reuters) - Britain’s blue-chip share index fell from a three-week high on Wednesday, halting a five-day winning run, with companies trading without the attraction of their latest dividend putting pressure on the broader market.

The effect of several major companies, including HSBC , Mondi and British American Tobacco, going “ex-dividend” took about 11 points off the FTSE 100 index . Their shares fell 0.9 to 2.2 percent.

The benchmark index was down 0.4 percent, or 27.42 points, at 6,751.89 points by 1049 GMT after gaining for five days in a row and climbing to its highest since late July a day earlier.

The FTSE 100 hit a peak of 6,894.88 points in mid-May, which marked its highest level since December 1999, but has since given up much of that ground.

Investors are concerns that a likely increase in interest rates in Britain would negatively impact businesses and squeeze consumer spending, analysts said.

The minutes from the Aug. 6-7 meeting of the Bank of England’s nine-member Monetary Policy Committee, released on Wednesday, showed policymakers had broken ranks over rates for the first time in three years, with two of them unexpectedly voting to tighten policy.

“It muddies the waters considerably. If it said one member had voted for a rate hike, then we would have got away with it. But now you have got two and it does send a powerful signal,” Peter Dixon, equity strategist at Commerzbank, said.

“But the BOE is aware of the fact that domestic demand would be vulnerable in the event of quick rate hikes. It argues for a fairly slow pace of tightening.”

Hantec Markets analyst Richard Perry said he would look to see if the FTSE 100 could get back up to the 6,834 point level, which would indicate the market’s recent rebound had more strength left in it.

“If the FTSE falls over again around these levels, it would just perpetuate the drift lower that we’ve seen in the last two months,” he said.

On the positive side, Standard Chartered rose 0.4 percent after saying late on Tuesday that it would pay a $300 million penalty and suspend or exit some important businesses after failing to weed out risky transactions that could be linked to money laundering.

Traders said the gains in the bank’s share price reflected an element of relief that the penalty was now out of the way, after media reports about it had circulated beforehand. The bank’s underlying business remained in good shape, they said.

“They’ve got more than enough capital to cover the fine,” said Beaufort Securities sales trader Basil Petrides. (Additional reporting by Sudip Kar-Gupta; Editing by Alison Williams)

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