Shares in London proved lacklustre in early trading this week. But better-than-expected inflation data provided a small boost on Tuesday. By midday, the FTSE 100 index was up 24.8 at 5535.3.
The engineering sector, however, was dealt a blow on Monday when US investment bank Lehman Brothers cut its earnings per share forecasts for a raft of engineers.
Lehman’s sector report cut the EPS forecast in 1998 for 37 engineering companies by 11% and for the following year for 20 companies by 19%. Those affected include GKN, IMI, LucasVarity, TI, BBA, BICC, Siebe and Fairey.
TI Group shares soared regardless. Helped by an upbeat trading statement they opened on Tuesday at 354.75p, up 27.75p on Monday’s trading.
The 600 Group lost 11p to 70.5p after a profit warning and Renold lost ground after warning of continued weak trading and a 23% fall in interim profits. It closed 29p down at 138.5p. Broker Albert E Sharp cut its current year forecast for Renold, reducing its full-year prediction from £22.5m to £17m. Nevertheless, it said the shares remained cheap and advised clients to buy.
Elsewhere in the sector, Smiths Industries gained 13p to 797p and Cookson put on 4.5p to 116p.
However, BBA was affected by negative sentiment following Lehman’s report and lost 14.5p to 328p.