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Britain's FTSE creeps higher, led by StanChart
February 19, 2013 / 9:31 AM / 5 years ago

Britain's FTSE creeps higher, led by StanChart

* FTSE 100 up 0.1 percent

* StanChart top riser; Morgan Stanley upgrades

* Vodafone weakens on Bernstein downgrade

* InterContinental falls from highs post results

By Tricia Wright

LONDON, Feb 19 (Reuters) - Britain’s top shares gained slightly on Tuesday, led by Standard Chartered which was upgraded by Morgan Stanley, with traders citing some caution in the run-up to German sentiment data due later in the day.

The FTSE 100 was up 6.71 points, or 0.1 percent, at 6,324.90 by 0908 GMT, in what is expected to be a relatively quiet early session following Monday’s closure of U.S. markets for the President’s Day holiday.

Germany’s ZEW survey, a gauge of investor and analyst sentiment in Europe’s largest economy, due at 1000 GMT, will fall under the spotlight.

Economists forecast the index to have risen to 35 points this month from 31.5 in January.

“We... expect a quiet open till we see the ZEW from Germany that will dictate the trend for today,” said Atif Latif, director of trading at Guardian Stockbrokers.

Latif reckoned the index could dip to recent support, at 6,273, on a number below expectations and, on the flipside, to climb to 6,367, around recent resistance.

Standard Chartered was the top blue-chip riser, ahead 2.5 percent. Traders cited a note from Morgan Stanley, in which it described StanChart as its preferred name among the UK’s Asia-focused banks versus HSBC.

“HSBC looks fairly valued on lower revenue growth expectations, while an improving Asian macro should reduce asset quality concerns for STAN, driving a performance reversal,” it said, lifting its rating on the StanChart to “overweight”.

HSBC, which Morgan Stanley cut to “equal-weight”, shed 0.6 percent.

Heavyweight mobile telecoms firm Vodafone fell 2.7 percent, exerting downward pressure on the FTSE 100 to the tune of nearly 9 points, as Bernstein cut its rating on the stock to “underperform” highlighting concerns over European operations.

“Vodafone’s European operations are in structural decline - in the over-supplied and commoditised business of European wireless Vodafone is neither the lowest cost provider nor a differentiated operator,” Bernstein said in a note.

Without structural change but assuming a significant new cost-cutting programme, the broker expected Vodafone’s European EBITDA excluding Turkey to shrink by 23 percent in the next three years.

InterContinental Hotels (IHG) dropped 2.3 percent following the publication of its full-year results as investors bank profit on the company’s shares, which were at an all-time high in the previous session.

IHG, the world’s biggest hotelier, posted an 11 percent rise in 2012 profit, underpinned by a strong U.S. business and expansion in developing markets, but Investec Securities cut its rating on the firm to “hold” from “buy” following a 30 percent rally in its shares over the last three-months.

The rally has propelled IHG’s 12-month forward price-to-earnings rating to around 19.5 times, compared with U.S. peer Marriott on 20.3 times, and the FTSE 100 on 11.6 times, and 40 percent above its historical average according to Thomson Reuters data. (Reporting by Tricia Wright, additional reporting by David Brett. Editing by Jeremy Gaunt.)

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