Anglo American slides on dividend fears

Anglo American was among the biggest fallers after Barclays analysts said its dividend looks vulnerable.

Negative free cash flows and the difficulty of operating in South Africa led Barclays to downgrade Anglo to "underweight". Marking forecasts to metals prices suggests consensus earnings forecasts are about 20 per cent too high, the broker said.

Anglo's Kumba iron ore mine in South Africa is unprofitable at spot prices while its Minas Rio project in Brazil risks being "lossmaking into perpetuity", Barclays argued.

The broker also expected Anglo to cut production guidance at De Beers, its biggest earnings contributor, to reflect weak demand for diamonds.

Anglo slid 2 per cent to £10.17.

As part of the same research, Barclays turned cautious on Rio Tinto, which fell 2.2 per cent to £28.12 after its quarterly production report showed weaker than forecast iron ore shipments.

While Rio has done all it can over the past two years to counteract ore's slump, "the capacity to continue surprising on this must surely be a little diminished", Barclays said.

The FTSE 100 was little changed as weakness among the miners countered reassuring results from Sky, up 5 per cent to £11.05, and Arm Holdings, ahead 3.9 per cent to £11.95. The index edged higher by 0.2 per cent, or 10.8 points, at 7,062.93.

WPP rose 2.7 per cent to £15.86 after US peer Omnicom reported a solid start to 2015 with 5.1 per cent organic revenue growth, beating expectations.

InterContinental Hotels hit another record high, up 3.8 per cent to £28.80, ahead of quarterly results on May 8.

A recent retread of bid speculation could spur InterContinental into another shareholder cash return in part funded by the sale of its $1bn-valued Hong Kong hotel, the last of its flagship owned properties, said analysts.

AB Foods lost 5.3 per cent to £27.12 after the Primark owner revised its guidance for the expected decline in full-year earnings from "marginal" to "modest".

Analysts noted a cautious tone from management on Primark margins, due to the impact of dollar strength and euro weakness on its sourcing costs.

Weir, the fracking pumpmaker, fell 3.6 per cent to £18.22 awaiting results overnight from key US rival FMC Technologies.

FMC was expected to cut guidance to reflect a sharper than expected fall in the US rig count, which would raise concerns about Weir's own trading update due next week.

Petrofac lost another 4.2 per cent to 874.5p as brokers including JPMorgan Cazenove downgraded in response to Monday's profit warning, its eighth since 2012, which was caused by labour costs in Shetland. The alert revived questions about Petrofac's risk controls and the sense of its $1bn move into deepwater drilling.

Just Eat gained 5.3 per cent to 468.7p on the back of "buy" advice from Citigroup. Website traffic data suggests Just Eat has been gaining traction in its core markets of UK, Denmark, France, Ireland, Spain and Canada, Citi said.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation