Posted by
alfredlester on Monday, November 08, 2010 11:36:30 AM
LONDON (MarketWatch) — Rolls-Royce Group PLC shares hogged the limelight again in London Monday, extending last week’s sharp decline, after Australian airline Qantas Airways Ltd. discovered more problems with the British company’s engines in its A380 fleet.
Meanwhile the FTSE 100 index , which fluctuated between gains and losses all morning, was last down 0.3%, at 5,856.64.
The index closed at a 29-month high on Friday, helped by news that the U.S. Federal Reserve would pump more money into the U.S. economy over the next few months.
“After the aggressive gains of late last week, equity markets are pausing for a breath for the time being and traders are resisting the temptation to start booking profits,” Anthony Grech, head of research at IG Index, said in emailed comments.
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Rolls-Royce was initially the top decliner on the U.K. benchmark, losing nearly 5%, but it later pared losses to less than 1%.
Qantas on Monday said it will suspend all A380s flights for a further three days after finding more problems with the Rolls-Royce engines powering the fleet. Engine failure forced one of Qantas’ A380s to make an emergency lending in Singapore last week.
Rolls-Royce Monday announced a $350 million maintenance contract for 12 Airbus A330s owned by Egyptair.
In a broadly lower energy sector, shares of Royal Dutch Shell PLC declined 0 cash till payday.7%. The oil major said it’s selling a 10% stake in Australia’s Woodside Petroleum for $3.3 billion. Shell will hang on to its remaining 24% stake in the company for at least a year.
Still in the commodities sector, miner African Barrick Gold PLC lost 2.7% after it was downgraded to sell from neutral at Goldman Sachs Group Inc. on fears output may disappoint in the short term.
In the pay-television business, shares of British Sky Broadcasting Group PLC rose 1.5% after the company said it’s reached its long-standing goal of 10 million TV customers. News Corp. , which owns around 39% of BSkyB, is the parent company of MarketWatch, the publisher of this report.
Outside of the top index, shares of fund manager Gartmore Group Ltd. took a battering, down 17%, after the company announced a strategic review and said its star manager, Roger Guy, will step down from day-to-day fund management.
The news comes just four months after the departure of Gartmore’s other star fund manager, Guillaume Rambourg, who left after becoming embroiled in a misconduct investigation.
“This is a business that can unravel pretty quickly. There is a general feeling that money is going to come out of the funds as key people leave. I’d be nervous about holding that stock,” said Paul Kavanagh, partner at Kilik & Co.
Gartmore said it has appointed Goldman Sachs to evaluate its strategic options, which could include a sale or a merger of the business.
London Markets: Rolls-Royce shares decline; London slips