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UK's FTSE slips, Rolls Royce slumps after profit downgrade
July 6, 2015 / 10:54 AM / 2 years ago

UK's FTSE slips, Rolls Royce slumps after profit downgrade

* FTSE 100 falls but outperforms rival European markets

* Rolls Royce slumps after cutting profit forecasts

* Sunday’s ‘No’ vote in Greece impacts euro zone equities (Adds detail, quote, fresh prices)

By Sudip Kar-Gupta and Alistair Smout

LONDON, July 6 (Reuters) - A slump in Rolls Royce led Britain’s top equity index lower on Monday, although it outperformed continental European indexes after Greece voted to rejected austerity conditions for a bailout.

Engineer Rolls Royce was the worst-performing FTSE 100 stock, falling around 9 percent after the company cut its profit forecasts for this year and next.

The company cited continued weakness in oil and gas markets plus lower demand for some of its aero-engine programmes as behind the move, increasing the challenge for its new chief executive.

Traders also expressed disappointment that a share buyback programme was being halted after Rolls Royce’s third profit warning in nine months.

“A new chief executive may be in place but it is the same story of investor disappointment as profit forecasts misfire for Rolls Royce,” said Brenda Kelly, head analyst at London Capital Group.

The blue-chip FTSE 100 index fell by less than other European markets, with some traders saying Britain was benefiting from being viewed as a relative “safe haven” away from the problems of the euro zone.

The FTSE was down 38.60 points, or 0.5 percent at 6,547.18 points at 1043 GMT, while Germany’s DAX fell 1.3 percent and the euro zone’s blue-chip Euro STOXX 50 index dropped 1.7 percent.

“The British stock market is slightly outperforming given ... (it is) relatively less exposed to the problems in Greece,” said Securequity sales trader Jawaid Afsar.

The FTSE 100 has erased gains made over the course of 2015 and is some 8 percent below a record high of 7,122.74 points set in April, with investor confidence being knocked in part by uncertainty over Greece.

The Greek vote on Sunday put the country in uncharted territory, risking a banking collapse that could force it out of the euro. Without more emergency funding from the European Central Bank, Greece’s banks could run out of cash within days. (Editing by Jeremy Gaunt)

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