London - Britain's FTSE 100 slipped to fresh 5-week lows on Monday, underperforming its European peers due to steep slumps in heavyweight mobile operator Vodafone and oil and gas firm BG Group.
Vodafone, the third biggest company in the FTSE 100, fell 6.4 percent after US mobile operator AT&T said it was not planning to take over the British-listed firm, thus putting an end to months of speculation.
That drop alone took 27 points off the British blue-chip index, while BG Group contributed another 22 points of the drop.
Its shares fell 13.5 percent - on track for their worst day since October 2012 - after the company warned that production this year and next would fall short of expectations, calling its guidance for 2014 “disappointing” due to ongoing problems in Egypt.
“The overall sentiment is extremely negative,” said Jordan Hiscott, trader at Gekko Global Markets.
“This morning we are seeing real money accounts exiting BG on this shock profit warning, which shows a dramatic shift in sentiment.”
Prior to the news, BG has been rated 'buy' or 'strong buy' by 15 analysts and 'hold' by 10, against just three 'sell' recommendations, according to Thomson Reuters Eikon data.
The FTSE 100 was down 66.97 points, or 1.0 percent at 6,496.77 points by 10:41 SA time, sharply underperforming a flat showing on euro zone's EuroSTOXX 50.
The drop in the FTSE - following on from a 2.4 percent fall last week - took the index down to fresh 5-week lows, and past technical support at the 100-day moving average.
The steepness of the sell-off has seen the index drop from technically overbought conditions, according to the 7-day relative strength indicator (RSI), into oversold territory in less than a week.
But technical charts suggest there is scope for more weakness to come, especially as the selloff started when the index was less than 10 points away from the May 2013 high, and less than 100 points from all-time peaks.
“The fact that we failed at such a key resistance level and then saw a significant pullback from there, that has to make you think that there could be more downside to come,” said Clive Lambert, an analyst at Futures Techs.
He highlighted the 200-day moving average - last around 6,555.65 points - and the December low of 6,422.23 points as the next key technical support levels for the cash index. - Reuters