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UK Equities
BHP Billiton slides to five-year low
From the Financial Times of Wed, 10 Dec 2014 19:20:40 GMT

Another day of turmoil in the oil and metals markets sent BHP Billiton sliding to a five-year low on Wednesday

BHP shares, down 1.9 per cent to £13.87, have lost nearly a third of their value since early August, cutting the miner’s market value by about $65bn. Iron ore and petroleum are expected to provide about 70 per cent of BHP’s operating earnings this year.

The sinking share price provided an unlikely backdrop for US traders to revive speculation that BHP might bid for Mosaic, the potash producer valued at $17bn.

Mosaic has long been seen as an alternative target for BHP in the wake of its failed bid for PotashCorp in 2010. Analysts dismissed the theory as implausible, however, given BHP management’s stated focus on cost-cutting and dividend growth.

CLSA turned buyers of BHP on valuation grounds. The miner’s oil division remains cash generative even if Brent crude falls to $55 and the balance sheet has enough slack to keep a 5 per cent dividend yield, it said.

Brent’s drop to a 2009 low kept the rest of the oil companies under pressure, sending the FTSE 100 lower by 0.5 per cent or 29.43 points to 6,500.04. BG Group dropped 2.9 per cent to 872.4p and Royal Dutch Shell B was off 2.6 per cent to £20.99.

“Whilst the bulk of the damage to [oil] sector share prices may now be done, where we struggle is to see quite what it is that drives them north,” said Deutsche Bank, which downgraded Shell. “The early months of 2015 feel unlikely to prove especially kind to the sector most particularly if, supported by the impetus of the collapse in oil, global growth shows signs of acceleration and stock markets continue to advance.”

Stagecoach fell 6.9 per cent to 379.2p after its interim results showed its profit mix shifting to rail operations from its bellwether UK bus division, which investors put on a higher earnings multiple.

Micro Focus faded 7.1 per cent to £10.51 on mixed first-half figures, with profit meeting expectations but core licence revenue disappointing. Numis and Panmure Gordon both suggested taking profits from the stock’s rally since September, when it bought US software maker Attachmate.

Card Factory climbed 5.8 per cent to 265p after a single block of 40m shares, equivalent to about 11 per cent of the retailer, changed hands via Liberum Securities at a premium to the market. The Charterhouse, private equity fund, retained a 41 per cent stake in Card Factory when it floated the business in May at 225p apiece.

Laird edged 0.3 per cent higher at 303.2p and Spirent held steady at 66.2p. Late in the day UBS added both wireless equipment makers to its “buy” list, with the broker viewing them as likely bid targets.

Quindell slumped 28 per cent to 32.8p after it said that Rob Terry, its founder and recently ousted chairman, had sold most of his 8.7 per cent stake. Trade data suggested that Mr Terry had dumped around 23m of his Quindell shares at 42p apiece.

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