FTSE 100 suffers largest drop this month

Engineer GKN was among the laggards on Friday as the FTSE 100 experienced its sharpest fall in two weeks.

Worries of forecast downgrades around GKN's trading update due May 6 sent the stock sliding 2.5 per cent to 361.3p. Disappointing news on Airbus A330 production rates and difficult year-on-year comparisons for its Driveline autoparts business mean consensus forecasts are likely to fall, according to Exane BNP Paribas.

Airbus said in February, shortly after GKN's full-year results, that it would cut production of the A330 widebody jet from 2016. GKN earns at least $3m from every A330 produced, so the production rundown will cut its 2016 sales by £75m to £100m, Exane said.

The FTSE 100 ended down 0.9 per cent, losing 65.82 points to 6,994.63, as weakness across global equities was amplified in financial stocks such as Schroders, down 2.5 per cent to £32.59. For the week the FTSE declined 1.3 per cent.

Ahead of its first-quarter production report due Thursday, Anglo American lost 2.7 per cent to £10.11. Analysts expect production from Anglo's Kumba iron ore mine in South Africa to be flat quarter on quarter, with copper numbers weaker due to maintenance shutdowns in Chile.

"Anglo does not have the same cost inflation shelter as its Australian peers and producer currency weakness can only partially offset the impact of falling iron ore prices," said HSBC.

Reckitt Benckiser faded 1 per cent to £59.40 and Unilever was down 0.6 per cent to £29.92. ACNielsen's Western Europe sales survey for March showed buth companies losing market share on falling sales, with Unilever's food sales seen falling 6.5 per cent against an overall market boosted by Easter eggs.

The data were more positive for Premier Foods, flat at 45.5p. Cake sales for the Mr Kipling owner rose 7 per cent for March, ACNielsen reported.

Leading the FTSE 100 risers, BP climbed 1.2 per cent to 479.4p.

"After BG, BP appears on the chess board as one of the few remaining sizable potential targets for a large synergistic deal in a low-price environment," said Liberum Securities.

Intercontinental Hotels gained 0.2 per cent to £27.22 on a retread of speculation that Starwood Hotels is under pressure to seek a merger. US hedge fund, Senator has been widely rumoured to be keen on Starwood inverting into its US-listed peer.

Rolls-Royce held steady at 978.5p after confirming its Trent engine will power 50 Airbus A380 jets owned by Emirates, which will add $6.1bn to its order book.

Qinetiq climbed 3.8 per cent to 202.5p after Barclays turned positive on the defence technology outsourcer, whose new chief executive Steve Wadley starts this month.

While Qinetiq is unlikely to deliver significant earnings growth over the next year or so, its prospective 3 per cent dividend yield and sector-leading free cashflow generation remains attractive, Barclays said. With net cash of around 25p per share remaining once a buyback programme completes, Mr Wadley has options, it said.

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