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Britain's FTSE pegged back by RSA, BSkyB slumps
November 11, 2013 / 9:00 AM / in 4 years

Britain's FTSE pegged back by RSA, BSkyB slumps

* FTSE 100 steady

* RSA slumps to 1-1/2 year low, CS sees scope for more bad news

* Broader market cheered by global economic improvement

By Toni Vorobyova

LONDON, Nov 11 (Reuters) - Britain’s FTSE 100 index steadied in early trade on Monday, cheered by signs of improvement in the global economy although any upward momentum was capped by falls in RSA and BSkyB.

Insurer RSA slumped 11.4 percent in heavy volumes after it commissioned an independent review of its financial and regulatory reporting processes and controls and suspended three senior executives at its Irish unit.

The announcement, which sent the shares to their lowest level since June 2012, came a week after a profit warning, prompting analysts at Credit Suisse to downgrade the stock to ‘underperform’ from ‘neutral’ and voice concerns that more negative news flow could follow.

The second biggest faller on the FTSE 100 was BSkyB, down 9.4 percent after BT beat it to win the rights to show Champions League soccer from 2015.

ITV fell 3.0 percent, while BT itself was also down, by 2.2 percent, as investors fretted about the cost of the deal and its impact on an increasingly competitive UK media market.

“The most action that we’ve seen this morning has been from BT and Sky, with BT paying an extraordinary amount of money to get the right to show Champions League and Sky losing those rights,” said Vinay Sharma, trader at Gekko Global Markets.

“Initially I saw a lot of liquidations as the market opened down and positions got stopped out, but now we are seeing some clients coming in to buy Sky.”

The relatively light weighting of Monday’s major fallers in the FTSE 100 - BT, BSkyB, ITV and RSA together add up to just over 2.5 percent - limited any losses for the broader market.

The blue-chip index was broadly flat at 6,709.73 points by 0841 GMT, with the majority of sectors in the black following gains on Wall Street on Friday.

Chinese data over the weekend showed stronger than expected growth in factory output and solid growth in retail sales in the world’s top metals consumer. That followed U.S. numbers showing more jobs being created in the world’s biggest economy than expected by even the most optimistic analyst.

“Finally, markets are reacting rationally to economic data,” analysts at Credit Agricole CIB said in a note.

“While the data added further weight to the potential for Fed tapering in December or January it was also recognised as evidence of a growing economy, and one that barely flinched in the wake of the government shutdown.” (Editing by Patrick Graham)

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