Newspaper article The Evening Standard (London, England)

Rolls Rallies as Brokers Ponder Profits Setback; Market Report

Newspaper article The Evening Standard (London, England)

Rolls Rallies as Brokers Ponder Profits Setback; Market Report

Article excerpt

Byline: MICHAEL CLARK

SHARES in aero-engines maker Rolls-Royce briefly touched 71p - their lowest level since being floated back in 1987 - before reducing the deficit to 3 3/4p at 73p as the City continued to ponder the consequences of yesterday's profits setback and pension black hole.

Broker UBS Warburg did the damage to the shares by downgrading from neutral to reduce and slashing its 12-month target price from 90p to 50p. R-R rattled brokers by reporting a slump in profits last year of 45% while revealing it had a u1.1 billion black hole in its pension fund.

The group has begun talks with its workforce, but has held to the u133 million payout to shareholders.

The low-flying share price of British Airways came under fresh selling pressure today as it briefly dipped below the 100p level to 99 1/2p before reducing the fall to 1 1/2p at 100 1/4p. Its stock value is now just above u1 billion and the odds on it losing its place in the Footsie 100 in next week's regular reshuffle are growing shorter by the day. It regained its place before Christmas, having been demoted in September for the first time since being floated in 1987.

Dealers say the weakness in the shares was prompted by comments from chairman Sir Colin Marshall, who said the group's " survivability was high" despite the prospect of war in the Middle East.

The rest of the market continued to lose ground in the face of a big sell-off for the Dow overnight on Wall Street. Selling pressure proved light, but the lack of support left prices struggling to find their own level.

The FTSE 100 index fell 44.5 points to 3580.8.

Sentiment was also depressed by a long list of blue-chip companies going ex-dividend.

They included Rio Tinto, down 48p at 1222p and British American Tobacco, 22p off at 602p. …

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