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FTSE 100 movers: AB Foods jumps on upgrade, Ocado hit by downgrade
London's FTSE 100 was down 0.2% to 7,619.26 in afternoon trade on Monday, off earlier lows but still in the red as relations between the US and China escalated.
RSA Insurance and Aviva rallied following a report in the Sunday Times suggesting that German insurer Allianz might be interested in acquiring them.
Associated British Foods was on the rise after RBC Capital Markets lifted the stock to 'outperform' from 'sector perform' and bumped the price target up to 3,100p from 2,800p, citing potential for Primark's like-for-like sales to improve.
"We see margin upside driven by better buying and inventory control and we think concerns over performance in the US have been overdone," the bank said.
RBC said Primark's LFL sales should return to positive territory in the second half of this year and FY19 thanks to an ongoing strong product offering and less competition from the likes of New Look, Pep & Co and Lefties.
"We think this should reassure investors who have been concerned about sluggish LFL sales trends and its lack of a transactional online offer."
On the downside, Ocado retreated as Bank of America Merrill Lynch cut the stock to 'underperform' from 'buy', saying the share price has baked in announced deals.
The bank said that with the US market signed and no near-term plans to expand into a new continent - especially Asia - the debate on Ocado is shifting from licensing potential to execution.
"We are not concerned and are changing our fundamental view. We still see Ocado's technology as a unique grocery online solution. But the next three years are about delivering results and validating the economics rather signing new partnerships from one or two incremental customer fulfilment centres (CFCs)."
Rolls-Royce was under the cosh despite a rating upgrade from Credit Suisse, as it gave back some gains from last week, when investors welcomed news that it was set to exceed its target of £1bn in free cash flow by 2020.
Paper and packaging group DS Smith was also in the red even as it posted a 21% jump in full-year adjusted pre-tax amid growth in all regions.
In the 12 months to 30 April, adjusted pre-tax profit rose to £473m, while revenue was also up 21%, to £5.77bn. The group said it benefited from the recovery of paper prices and growth from acquisitions, which more than offset input cost headwinds. In addition, currency translation effects also lent a hand.
FTSE 100 - Risers
Micro Focus International (MCRO) 1,364.50p 1.60%
RSA Insurance Group (RSA) 660.80p 1.35%
Aviva (AV.) 509.10p 1.33%
GVC Holdings (GVC) 1,018.00p 1.29%
United Utilities Group (UU.) 770.00p 0.94%
Royal Dutch Shell 'A' (RDSA) 2,544.50p 0.91%
Royal Dutch Shell 'B' (RDSB) 2,646.00p 0.78%
Associated British Foods (ABF) 2,750.00p 0.51%
DCC (DCC) 6,935.00p 0.43%
BP (BP.) 567.30p 0.41%
FTSE 100 - Fallers
Ocado Group (OCDO) 981.40p -5.63%
Rolls-Royce Holdings (RR.) 926.40p -2.48%
Marks & Spencer Group (MKS) 296.20p -2.41%
Pearson (PSON) 867.40p -1.90%
Randgold Resources Ltd. (RRS) 5,606.00p -1.82%
Smith (DS) (SMDS) 554.40p -1.67%
3i Group (III) 956.40p -1.58%
Next (NXT) 6,036.00p -1.47%
Croda International (CRDA) 4,854.00p -1.42%
Sage Group (SGE) 652.00p -1.39%