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The Guardian - UK
The Guardian - UK
Business
Simon Bowers

FTSE 100 shrugs off Kim Jong-il's death

Fears that London market would open heavily down on fears of political instability in the wake of the death of North Korean leader Kim Jong-il proved ill founded. The FTSE 100 index opened down 30 points – versus expectations of a fall as low as 69 points – demonstrating that traders tend to be far more relaxed about the prospect of political unrest outside key oil-producing states. By 9.30am the FTSE was down only 10 points at 5377.

Looking across the sectors it was quickly clear market attention was mainly focused on the Vickers report, with Lloyds Banking Group and Barclays respectively down 0.45p at 24.05p and down 2.6p at 168.9p. Royal Bank of Scotland was also a faller, down 0.17p at 19.83p. Reports over the weekend suggested the government was toughening its resolve to push through the recommendations of Vickers, designed to protect retail depositors from the risks associated with investmeny banking operations.

Woes continued at online retailer Ocado – down 5.2p at 66p, almost a third of its 180p float price – after it blamed continued teething problems at the group's Hatfield warehouse for constraining the company's delivery capabilities towards the end of the financial year. That means ebitda for the year to 27 November will be in the range of £27.5m to £28.5m. Consensus expectations had been for ebitda of £34m.

Panmure Gordon analyst Philip Dorgan described the profits warning as a "significant miss".

"We don't see Ocado as special and we believe that it has a tough competitive environment ahead of it. We also see execution risk increasing as a consequence of this announcement. We believe that Ocado will struggle to make money before 2013. We therefore reiterate our Sell recommendation and target price of 50p."

City investors are losing patience with Ocado management and the fact that it has taken them over three weeks to update on such a profit warning will not enhance their reputation.

Elsewhere in the online world, slots and poker operator 888 Holdings nudged up 1.75p at 38.25p, after the group reported a strong end to the year, suggesting operating profits will be a good way ahead of current market expectations. Next year is expected to be a big one for the regulation of online gambling firms.

Ashtead Group was among the FTSE 250 risers, up 6.6p at 216.2p, as analysts discussed whether the US and UK equipment hire business might make a likely takeover target. The speculation followed an announcement on Friday from United Rentals, the world's largest equipment rental group, revealing it is to acquire rival firm RSC Holdings in a $1.9bn (£1.2bn) takeover.

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