Investors turned their backs on insurers today despite upbeat results from two of the biggest stocks in the sector.
Profits of £1.32bn from Norwich Union owner Aviva and further evidence of recovery at Royal & Sun Alliance were not enough to lift the heavyweights into positive territory.
The negative reaction was reflected on the FTSE 100 Index off 13.4 points in the first hour to stand at 5364.1 as it retreated from yesterday’s three-and-a-half year high.
Oil stocks were again providing the market with a degree of support after the price of crude broke beyond 65 US dollars a barrel in overnight trading.
BP rose 6p to 659.5p to reach its highest level for nearly five years, while investors also liked Royal Dutch Shell – up 19p at 1955p.
Corporate news was dominated by the insurance sector as Aviva posted a 21% hike in profits and said the integration of the RAC motoring organisation was progressing quickly.
But shares in Aviva weakened 6p to 651p as investors noted a lower profits figure from the firm’s life and pensions business in the UK.
There was also a 0.5p fall by Royal & Sun Alliance to 93.5p even though the insurer posted half-year profits at the top of the range predicted by analysts.
Elsewhere, Arla Foods fell 9% or 6.5p to 63p after higher oil and utility costs forced it to warn on profits. Second-tier rival Dairy Crest was also down 7% or 36.5p at 478.5p.
References: EGi News 11/08/05
