Newspaper article The Evening Standard (London, England)

L& G Leads Fallers on Fears Dividend Will Be Trimmed

Newspaper article The Evening Standard (London, England)

L& G Leads Fallers on Fears Dividend Will Be Trimmed

Article excerpt

Byline: MICKEY CLARK MARKET ROUND-UP

LEGAL & General was the biggest bluechip casualty today, losing 4p to 40.9p ahead of results tomorrow that are expected to produce a cut in the payout to shareholders.

But as traders point out, the price has almost doubled since hitting a low of 23p earlier this month, with the shorts feeling the squeeze. Today it emerged that hedge fund Millennium Partners had an outstanding short position of 0.21% of the total shares in issue. It coincided with ING slashing its target from 77p to 34p to reflect the deteriorating outlook for the life assurer in the UK.

ING says the results will be dominated by credit, and believes L& G's decision to top up reserves by [pounds sterling]650 million for credit defaults will deflate profits. This also begs the question of whether total reserves of [pounds sterling]1.2 billion are adequate.

Rival Blue Index says any sign of the shares breaking above the 50-day moving average of 47p in the run-up to the next trading statement will be a bridge too far. It warns: "Any disappointments or unpleasant surprises in the statement will most likely result in severe punishment for the shares, along with other contentious issues such as dividend and cash reserves." Financial stocks generally slammed into reverse after posting early gains.

The exceptions were Royal Bank of Scotland, adding 0.7p at 25.7p, and Friends Provident, up 3.5p at 64.9p.

But Barclays lost 2.7p at 118.8p and Lloyds Banking Group fell 3.4p at 58.1p. HSBC retreated 24p at 3933/4p, having gone ex the banking giant's [pounds sterling]12.5 billion rights issue in London.

Elsewhere, the bears were taking a breather after rushing to cover most of their outstanding short positions following yesterday's announcement of a $1 trillion rescue package for America's banks. Leading shares in London gave back some of yesterday's gains, leaving the FTSE 100 index nursing a loss of 51.84 points at 3900.97. New York also ran into profit-taking when trading resumed this afternoon, and the Dow was down 63.72 at 7712.14.

Mining shares came off the boil in the wake of yesterday's gains inspired by evidence of an increase in demand for imports by China. …

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