ARM helps FTSE end flat on iPhone boost

Reuters

By Francesco Canepa

LONDON (Reuters) - The FTSE 100 ended flat on Wednesday as chip-maker ARM Holdings, boosted by the launch of Apple's latest iPhone, helped offset profit-taking on DIY retailer Kingfisher after its results.

Shares in ARM rose 4.8 percent in volume 1-1/2 times its 90-day average a day after partner Apple unveiled a new smartphone using the British chip designer's latest technology.

"It is the first handset that has ARM's latest generation technology in it... so that's very good in itself," says RBC Capital Markets analyst Andrew Dunn.

The stock was the top riser on Britain's blue-chip FTSE 100 index, which closed 4.44 points higher, or 0.1 percent, at 6,588.43 points. The mid-cap FTSE 250 fell 0.2 percent to 15,245.78 points slipping off an all-time high hit the previous day.

They trailed solid gains on Germany's Dax, Italy's FTSE MIB and Spain's Ibex as investors cashed in on UK-focussed recent outperformers such as Kingfisher and mid-cap housebuilder Barratt Developments.

The two stocks fell 2.7 percent and 4.6 percent, respectively, after reporting in-line results, frustrating trader bets for estimate-beats and spurring profit taking on two stocks that have risen 47 percent and 60 percent year to date.

Investors sentiment on both firms, which are heavily exposed to Britain's domestic economy and, in Kingfisher's case, France, was high after a string of positive economic data out of Europe.

This was reflected in high valuations, with Kingfisher trading at 16.3 times its expected earnings for the next 12 months, its highest multiple since 2009, Thomson Reuters data showed.

"We have seen some profit taking coming through," Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said.

"As is so often the case it's better to travel than to arrive as far as the stock market is concerned."

The more upbeat macro backdrop in Britain was underpinned on Wednesday by data showing the unemployment rate in July dropped to its lowest since late last year.

Emerging-market focused bank HSBC knocked 5 points off the FTSE after JP Morgan downgraded its recommendation on the stock to "hold" from "buy", preferring domestic British banks in light of improving economic conditions in the country.

Giles Watts, head of equities at City Index, said he remained confident the index would continue to rise into the year-end as the global economy improved.

But he cautioned the prospect of a likely reduction in U.S. monetary stimulus - which has helped the FTSE rise 17 percent in the past year - could sap investor appetite this month.

"We are going to see a little bit of volatility but there is still a feeling that this is going to grind its way up to 6,700," he said.

(Reporting By Francesco Canepa; Editing by Toby Chopra)

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