* FTSE 100 index closes 0.3 percent lower
* Admiral shares fall sharply after update
* Aviva drops on concerns about turnaround plan
By Atul Prakash
LONDON, July 9 Britain's top share index fell
for a third straight session to a two-month low on Wednesday,
with Admiral sinking after a downbeat trading update
and Aviva slipping after outlining its turnaround
Car insurer Admiral slumped 3.3 percent after saying
revenues fell in the first half of the year and there was no
firm evidence of a return to growth in UK car insurance
The company said it planned to launch its first ever bond of
up to 200 million pounds ($340 million) to diversify its capital
base and help prepare to meet Solvency II regulations in 2016.
Oriel Securities repeated its "sell" rating on the stock,
while Berenberg said a likely fall in margins was not reflected
in current consensus earnings forecasts.
"The market will be surprised that Admiral sees a need to
raise debt. With the company forecasting falling margins and
showing falling turnover, we believe these earnings forecasts
will have to come down," Berenberg analyst Peter Eliot said.
Admiral's trading volume was more than four times of its
90-day daily average, while trading on the FTSE 100 index was
near 80 percent of its 90-day average.
Aviva was another big casualty, off 3.6 percent. The
UK insurer aims to double the amount of excess cash it generates
during the next stage of a turnaround plan, but its shares fell
on worries the plan did not go far enough.
The FTSE 100 index closed 0.3 percent lower at 6,718.04
points after climbing to a high of 6,740.82 points earlier in
the session. It suffered its biggest one-day percentage fall
since March on Tuesday, when it fell 1.25 percent.
"It feels like there's really negative sentiment; people are
worried about earnings ... I think we'll see a couple of days of
selling," Joe Rundle, head of trading at ETX Capital, said.
However, airlines, which slid on Tuesday following a profit
warning from Air France-KLM, recovered some ground as
traders deemed the weakness to be overdone.
EasyJet climbed 3.1 percent to top the FTSE 100
leader board, while British Airways owner International
Consolidated Airlines Group rose 1.2 percent.
Investors' focus has shifted to the second-quarter earnings
season for hints about the market's direction in the near term.
While U.S. aluminium giant Alcoa kicked off the
reporting season with quarterly results that beat analysts'
expectations, investors were doubtful that would be enough to
give a big fillip to the FTSE, hovering around multi-year highs.
"The stock market has become vulnerable to more corrections,
particularly ahead of the reporting season and at a time when
volumes are going to be thin due to summer holidays," Peter
Dixon, equity strategist at Commerzbank, said.
"You don't want to be too exposed in that kind of
Also weighing on the FTSE 100 were stocks trading without
the attraction of their latest dividend, namely Coca-Cola HBC AG
and Next. They knocked 1.06 points off the
(Reporting by Atul Prakash; Editing by Robin Pomeroy)