This Morning in London major shares dropped back in early deals, with banks and miners the main casualties. Friday's above-forecast US CPI data dented hopes for further Fed rate hikes and bought hefty declines on Wall Street. Unseasonal weakness in retailers was a focus as investors fretted over the strength of Christmas sales and negative broker comment. Blue chip Next (NXT) and second liner Debenhams (DEB) fell back after Seymour Pierce cut its ratings on both companies in a review of the UK general retailers. Seymour Pierce noted that, since October, there has been a slew of profit warnings and stories from the High Street of reduced footfall and soft trading. As ever, the broker thinks there will be winners and losers, but its sees one of those areas most at risk being the fashion retailers, hence its downgrades for Next and Debenhams. In reaction, Next shares shed 57p at 1,620p, while Debenhams lost 4.75p at 76.5p. At 9:50 the FTSE-100 was 90.7 points lower at 6,306.3 with the FTSE-250 off 238.9 points at 10,174.7.
BROKER RECOMMENDATIONS
Canaccord has initiated coverage of Handmade (HMF) appending a buy recommendation and a price target of 55p.
Daniel Stewart has reiterated buy K3 (KBT) (221p target price) and says buy Provident Financial (PFG) (900p price target).
Goldman has reinitiated coverage of Elan Corp (ELA) appending a neutral recommendation and a €29 target price and has reiterated neutral on Avis Europe (AVE) (cutting the price target to 30p from 46p).
The broker has neutral on Davis Service Group (DVSG) (cutting the price target to 535p from 571p) and Northgate (NTG) (cutting the price target to 1010p from 1108p).
Goldman says buy Renovo (RNVO) (cutting the price target to 389p from 402p).
KBC has downgraded Close Bros (CBG) to hold from add and is positive on Interior Services Group (ISG).
Investec reiterates hold Cadbury Schweppes (CBRY) (600p price target).
Last Friday in New York shares fell, with the major indices being rocked by recording their worst weekly drop in 5-weeks, as rising inflation stoked investors' fears about the economy, while reducing the possibility of another Federal Reserve rate cut next month. The Dow Jones closed down 178.11-points to 13339.85, the Nasdaq fell 32.75-points to 2635.74, while the S&P declined 20.46-points to 1467.95. On the week the Dow fell 2.1%, the Nasdaq dropped 2.6%, while the S&P declined 2.4%.
On this day:-
1538 - Pope Clement VII excommunicated King Henry VIII of England.
1718 - England declared war on Spain.
1819 - In South America, Simon Bolivar became President of the Republic of Colombia, created by the union of Venezuela and New Granada.
1849 - Thomas and William Bowler, makers of felt hats, sold their first 'bowler'.
1888 - The opening of the Lyric Theatre in Shaftesbury Avenue.
1892 - The Russian Imperial Ballet gave the first performance of Tchaikovsky's The Nutcracker in St Petersburg.
1903 - The Wright brothers, Wilbur and Orville, made the first controlled powered flight
1909 - Albert I became King of Belgium following the death of Leopold II.
1922 - Last British troops leave Irish Free State.
1939 - World War II: German battleship Admiral Graf Spee was scuttled at the entrance of Montevideo Harbour, after being defeated in the Battle of the River Plate.
1941 - World War II: Japanese troops began the invasion of North Borneo.
1967 - British yachtsman Alec Rose arrived in Australia aboard his boat The Lively Lady, after sailing solo from Great Britain, a voyage of 14,500 miles.
1967 - Australian Prime Minister Harold Holt was presumed drowned after disappearing while swimming at Portsea.
1973 - Arab terrorists killed 31 people during the hi-jacking of a German airliner at Rome Airport.
1983 - An IRA car bomb killed 6 Christmas shoppers and injured scores of others outside Harrods store in Knightsbridge, London.
1986 - Mrs Davina Thompson created medical history when given a new heart, lungs and liver during an operation at Papworth Hospital in Cambridge.
1991 - Russian leaders Boris Yeltsin and Mikhail Gorbachev agreed to dissolve the USSR and proclaim a new Commonwealth of States (CIS) on New Years Day
