Belfast Telegraph

FTSE 100 falls into the red despite merger excitement

Shares dipped despite the Standard Life announcement
Shares dipped despite the Standard Life announcement

The FTSE 100 fell into the red on Monday despite investor excitement over a potential £11 billion merger between Aberdeen Asset Management and Standard Life.

Standard Life shares rose 21.5p to to 400p on the news, easily holding the top spot on London's blue chip index, which ended the day down 0.3% or 24.14 points at 7,350.12 points.

The deal would create one of the world's industry powerhouses, overseeing £660 billion worth of global assets.

Neil Wilson, a senior market analyst at ETX Capital said: " The deal makes perfect sense as a defensive play.

"The explosive growth in passive investing trends has heaped pressure on active managers like Aberdeen and Standard Life and consolidation had to be on the cards."

Mr Wilson cited statistics which show that while more than half a trillion US dollars flowed into active funds over the past year, more than 325 billion US dollars (£265 billion) flowed out.

"No industry can survive this kind of disruption without consolidation," he added.

Aberdeen Asset Management shares was one of the biggest gainers on the FTSE 250, up 11.9p at 298.3p

In currency markets, the pound dropped 0.4% to seven-week lows against the US dollar at 1.226, and was relatively flat against the euro at 1.156.

Investors are looking ahead to Britain's UK spring budget due on Wednesday, which could provide a much-needed boost for sterling.

Across Europe, the French Cac fell more than 0.4% while the German Dax dropped over 0.5%, weighed down by a near-8% drop in Deutsche Bank shares.

It came after the troubled German lender announced plans to raise at least eight billion euro (£6.9 billion) through a share sale and said it would sell off a stake in its asset management business.

There were also investor jitters after it emerged the bank may face fresh legal challenges in Europe over so-called "last look" foreign exchange trading practices.

UK lenders also floundered at the bottom of the FTSE 100, with Royal Bank of Scotland down 6.4p to 240.6p, Barclays down 4.45p to 226.95p, Lloyds Banking Group lower by 0.91p to 67.51p.

Commodity driven stocks including miners were some of the worst performers on the blue chip index after China's premier said the country was aiming to expand its economy by 6.5% in 2017.

Glencore fell 11.75p to 326.5p, Anglo American dropped 34.5p to 1,238p, and Antofagasta fell 18p to 802p.

In oil markets, Brent crude prices were hovering on the flat line at 55.78 US dollars per barrel (£45.56), lifted from earlier losses on hopes that Opec will extend its supply curbs into the second half of 2017.

The biggest risers on the FTSE 100 were Standard Life up 21.5p to 400p, Dixons Carphone up 5.8p to 303.6p, Taylor Wimpey up 3.1p to 186.1p, and Schroders up 48p to 3,119p.

The biggest fallers on the FTSE 100 were Glencore down 11.75p to 326.5p, Anglo American down 34.5p to 1,238p, Royal Bank of Scotland Group down 6.4p to 240.6p, and WPP down 39p to 1,720p.