FTSE 100 Watch: Footsie Declines as GSK Scandal Worsens

on Jul 22, 2013
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iNVEZZ.com Monday July 22nd: The Footsie declined in the morning session today, dragged down by heavyweight GlaxoSmithKline. At 12.16 BST the blue-chip index was 15.76 points or 0.24 percent lower at 6,614.91.

**GSK** shares fell by 1.31 percent to 1,692.50p following the admittance by the pharma giant that some of its employees had possibly breached Chinese law. Chinese police have already detained four of GSK’s most senior executives in the country as part of an investigation into allegations of corruption and bribery (GSK’s Share Price Declines on Admittance of Possible Breach of Chinese Law).

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“Things seem to be getting more worrying … We really now have to see more of the facts before forming a definitive view. If it does transpire that Chinese law has been broken we feel that downside pressure for the (GSK) share price will remain in place for the short to medium term,” said Atif Latif, trader at Guardian Stockbrokers.
**Randgold Resources** was one of the top risers on the Footsie after the company emerged as a clear winner in two City analysts’ reviews of precious metal miners. Shares in the company climbed by 2.56 percent to 4,641.00p in morning trading. Morgan Stanley said that gold equities could fall but investors should be “overweight” on Randgold which “looks well positioned to continue to outperform in the current environment”.

**Fresnillo** also saw solid gains with the shares rising by 3.69 percent to 1,067.00p after JP Morgan deemed the company, along with Randgold and Polymetal, as the best able to weather weaker metal prices. “We believe investors underappreciate the potential for self-help among the UK gold producers; leverage is low, growth is imminent, and Randgold, Fresnillo, Polymetal and even African Barrick have flexibility to reduce costs and protect free cash flow,” JP Morgan’s analysts commented.

**Anglo American** edged up by 0.15 percent to 1,381.00p after its subsidiary Anglo American Platinum swung to a profit in the first half of the year, supported by better sales volumes.
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Oil firms were trading higher helped by a rise in oil prices. **BG Group** and **Tullow Oil** rose by 1.20 percent and 0.90 percent to 1,221.00p and 1,117.00p, respectively.

Outsource groups remained under pressure after last week’s announcement by the UK government that it was reviewing all of its current contracts on pricing concerns. **Compass Group**, which provides food and support services, fell 1.06 percent to 887.00p.
The volume of shares changing hands in companies on the Footsie was 35 percent less than the 30-day average, data compiled by Bloomberg showed. Fourteen FTSE 100 firms are due to report earnings this week, notable ARM Holdings and GSK on July 24, Unilever on July 25 and British Sky Broadcasting Group on July 26.
**The FTSE 100 was 19.44 points or 0.29 percent lower at 6,611.23 as of 22.07.2013, 13.08 BST.**

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