FTSE dragged down after Shell reports Q4 profit €295m short of expectations
THE FTSE 100 share index eased on Thursday, as a run of gloomy earnings and outlooks from some of Britain's top companies prompted investors to take profits on the market's rally to 4-1/2 year highs.
Royal Dutch Shell alone took around 8 points off the UK blue chip index after the oil major's fourth quarter profit came in nearly €295 million short of expectations.
Drugmaker AstraZeneca was the next biggest weight, down 4.2 percent after warning that this year will be tough, while miner Antofagasta extended losses into a second day following a weak 2013 outlook..
With the FTSE 100 already up more than 7 percent so far in January, the signs of weakness in the earnings season prompted some investors to lock in profits on the last day of the month.
"Given the mixed results and the markets have risen so much this month, so it's no surprise to see some money being take off the table," said Vinay Sharma, trader at Gekko Capital Markets.
The FTSE 100 was down 20.17 points, or 0.3 percent, at 6,302.62 by 0838 GMT, extending its retreat from this week's 4-1/2 year highs.
"Because it's the last day of the month ... I would expect some pressure on the FTSE as we approach the close. It's down 20 (points) already, so we could possibly go another 20 points from here," Sharma said.
Sentiment was also hurt by concerns about the U.S. economy -- a key market for Britain's heavyweight exporters -- after data showed an unexpected contraction in fourth quarter gross domestic product and the U.S. Federal Reserve acknowledged that economic activity had stalled.
That added to investor caution ahead of Friday's keenly watched U.S. jobs data.
For domestic-focused UK companies, however, there was some good news from stronger than expected January data on consumer confidence and house prices.
In a further sign of an improving domestic backdrop, pay-TV group BSkyB attracted more customers than expected in the final three months of 2012, boosting its shares 2.3 percent to the top of the FTSE gainers list.
"The shares should respond positively but Sky's communications peers will report in the next few days and structural concerns ... are not dispelled by these figures," analysts at Morgan Stanley said in a note, upgrading its price target on the stock to 860 pence from 827 pence.
The large and mid-sized UK companies who have already reported full year results have, on averaged, undershot earnings expectations by 0.6 percent, according to Thomson Reuters StarMine data.