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* FTSE 100 down 0.5 pct
* Banks weigh as Fed minutes indicate balance sheet
* Woodford-backed Allied Mind drops below IPO price
* Pearson hit by Exane downgrade, trades ex-div
By Helen Reid
LONDON, April 6 British shares dropped on
Thursday after minutes of the Federal Reserve's last meeting
indicated the bank would shrink its balance sheet later this
The FTSE 100 was down 0.6 percent in early trade,
with financials the biggest weight as investors priced in
smaller central bank balance sheets, after U.S. equities dipped
"There were two elements in the Fed minutes: the fact that
some officials thought equities were overvalued; but the smarter
money is looking at the fact balance sheet reduction seems to be
indicated towards the end of this year," said Panmure Gordon
chief economist Simon French.
"Markets are taking their cue from the U.S. investors,
saying the shrinking of balance sheets means less money sloshing
around, which will weigh on asset prices," he added.
Discounting a raft of stocks trading ex-div,
banks Lloyds and RBS were the top fallers, down
1.8 and 2.2 percent, tracking a broader sell-off in European
Pearson was down 8.9 percent, trading ex-div and
further weighed by a downgrade from Exane to 'underperform'.
"Structural pressures in U.S. higher education courseware
are now well documented in the share price. However, we raise
fresh concerns on the sustainability of double-digit growth in
Pearson's U.S. virtual schools business, its fastest growing
segment in North America, currently accounting for 6 percent of
group revenues," the broker said.
Real estate stocks were the top European gainers, and
British Land Company and Land Securities Group
were up 1.2 to 1.4 percent.
Miners Fresnillo, Antofagasta and Anglo
American also rose 1.3 to 1.5 percent, with the price of
gold firming ahead of a meeting between President Donald Trump
and his Chinese counterpart Xi Jinping.
Intellectual property firm Allied Minds was the top
mid-cap faller, down 8.4 percent to a record low and trading
below its IPO price for the first time, taking its year-to-date
losses to 63 percent.
The company, 28 percent owned by Woodford Investment
Management, had its worst ever day on Wednesday after cutting
funding for seven of its portfolio companies.
Jefferies raised the stock to 'hold' from 'underperform'.
"Allied Minds' new CEO has taken less than a month to cull
the weaker companies in the portfolio," said the broker. "This
has happened more quickly and broadly than we expected, but we
see this $147 million hit as decisive rather than panicked or
Tullow Oil traded without rights to its cash call
and was up 6 percent, the top European gainer.
Biotech company BTG was up 3.8 percent, the second
top European gainer after it set a bullish full-year forecast.
(Reporting by Helen Reid, editing by Larry King)