* Blue-chip FTSE 100 index falls 0.3 percent
* Petrofac plummets 15.6 pct after profit warning
* FTSE 100 less than 2 pct away from record high
By Tricia Wright
LONDON, May 9 Britain's top share index slipped
from a 10-week high on Friday, with energy services group
Petrofac slumping after a profit warning and
aero-engines maker Rolls-Royce hurt by broker downgrades.
Tensions in Ukraine also prompted investors to take some
money off the table after recent gains.
Petrofac fell 15.6 percent after warning its 2014 net profit
would fall by as much as 11 percent to between $580 million and
$600 million due to a poor performance from its Integrated
Energy Services division.
Analysts highlighted that weak results are being punished
more than they would have been in the past, in the wake of a
powerful rally in 2013 in anticipation of encouraging earnings.
But while this has left valuations looking full, a
recovering U.S. economy should help pick up the slack, with a
drop in initial jobless claims on Thursday the latest sign that
the labour market there was improving.
The FTSE 100 index trades on a 12-month forward
price/earnings ratio of around 13 times, against its 10-year
average of about 12 times, Thomson Reuters Datastream shows.
"Individual share prices are likely to react very poorly
when you have a profits warning like (with) Petrofac... but the
overall market is likely to be driven higher by improving
economic momentum out of the U.S," Gerard Lane, equity
strategist at Shore Capital, said.
Tensions in Ukraine have been prompting investors to stay
cautious. The situation remained fragile with pro-Moscow
separatists in the east of the country ignoring a call by
Russian President Vladimir Putin to postpone a referendum on
self-rule, declaring they would go ahead on Sunday with a vote
that could lead to war.
Rolls-Royce fell 1.5 percent, pressured by a downgrade by
Barclays to "underweight" from "overweight" and a cut in its
target price for the stock to 930 pence from 1,225 pence. The
downgrade followed a reduction in its target price by JPMorgan
to 1,300p from 1,350p on Thursday.
"Slow growth over the next two years, high exposure to a
single yet-to-enter service aircraft, significant cash and
margin headwinds, accounting concerns, and questions over
capital allocation lead us to our 'underweight' rating,"
Barclays said in a note.
Petrofac and Rolls-Royce were among the biggest decliners on
the blue-chip FTSE 100 index, which fell 22.85 points,
or 0.3 percent, to 6,816.40 points by 1035 GMT after rising to a
high of 6,840.37 on Thursday, its highest since late February.
The index was just short of 2 percent away from its record
high set in December 1999 and charts suggested it had the
potential to set new highs in the near future.
"From a longer-term perspective, the FTSE 100 index is
reaching a 15-year resistance from the 1999 and 2007 peaks,"
Dominic Hawker, technical analyst at Messels, said.
However, a "breadth indicator" that measures the percentage
of stocks trading above their 200-day average was not overbought
and suggested the FTSE 100 could still gain upward momentum,
Hawker said. "I still remain positive that the market can break
(Additional reporting by Atul Prakash; editing by Susan Thomas)