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Europe: Miners provide foundation for FTSE while ConvaTec plummets
[LONDON] Medical device firm ConvaTec was bruised after a profit warning on Monday, but mining companies stemmed broader losses on the FTSE share index.
Britain's FTSE 100 ended the session down 0.1 per cent, with basic resource stocks adding the most points to the index.
Data showing improving manufacturing profits in China, indicating robust growth in the world's top metals consumer, boosted heavyweight miners as copper prices soared to a three-year high.
Antofagasta, Glencore, BHP Billiton , Rio Tinto and Anglo American rose 0.5 per cent to 1.9 per cent.
Mid-caps Sirius Minerals, Kaz Minerals and Vedanta Resources gained 3.1 to 6.4 per cent.
Analysts' earnings expectations for the basic resources sector have grown rosier in recent weeks.
UK-listed miners rose in line with the European sector index , which was up 0.8 per cent at its highest since February 2013.
ConvaTec plummeted 26.6 per cent after the firm warned full-year revenue growth would fall short of expectations, citing severe supply issues impacting two divisions that account for 60 per cent of revenue.
The stock hit an all-time low and posted its worst day since its listing a year ago.
"For such a high-profile IPO to have its growth expectations slide so soon after listing is a poke in the eye for the London market," Patronus Partners analysts said in a note.
Earnings-per-share expectations could be downgraded 5 to 10 per cent after this update, they predicted.
"ConvaTec is on a punchy rating," said Paul Kavanagh, director at Patronus.
"We hope this statement really bottoms out the extent of the problem, but the jury is still out until we see progress in the next three months," he added. "If there's not a bit of catch-up then 2018 forecasts could come under further pressure." Another big faller was engineering group GKN, down 3.4 per cent.
Several brokerages cut their target price on the stock after GKN warned its annual profit would fall short of expectations due to disappointing aerospace trading.