Leading shares have slipped back, and even good news from AstraZeneca has failed to help the pharmaceutical group buck the trend.
The company, still awaiting news on any new moves from rebuffed predator Pfizer, has unveiled a partnership with US group Eli Lilly for its experimental alzheimer's drug.
AstraZeneca has been looking for a partner for the drug, labelled AZD3293, which is set to enter late stage trials. Under the deal just announced, Lilly will pay up to $500m to share rights to the drug, depending on how successful it ends up being.
But in a weak market, AstraZeneca's shares are down 38.5p to 4506.5p. Analyst Brian White at Shore Capital kept his buy recommendation, saying:
Under the terms of this agreement AstraZeneca should receive a first milestone payment of $50m in the first half of 2015 and in the event that it is successfully developed, up to $500m in development and regulatory milestone payments, while the costs will be shared equally.
Although the prospect for the development of an effective treatment which modifies the relentless progressive neurodegenerative nature of Alzheimer's disease is a very attractive one, such an objective has been littered with mixed results and disappointment to date, and as such it makes sense to share the risk involved. For its own part Lilly has been active in this experimental field with an extensive research programme most recently with solanezumab, which failed in two large Phase III trials. We not currently include any sales of AZD3293 in our AstraZeneca forecasts.
Overall the FTSE 100 has fallen 31.05 points to 6773.16, with investors remaining nervous ahead of the Scottish referendum vote on Thursday. Continuing concerns about the effect of sanctions against Russia over its involvement in Ukraine have also undermined sentiment, while there is also caution ahead of the outcome of the latest US Federal Reserve meeting, where a more hawkish tone on interest rates is possible.
UK inflation figures were in line with expectations, giving little clue as to the timing of the next move in the country's borrowing costs.
Among the risers Antofagasta has added 3p to 764.5p as Deutsche Bank moved from sell to hold with an 820p price target, while Anglo American is up 5.5p to £14.94 as the bank issued a buy recommendation. It said:
As the dust is settling on mining growth post a period of frantic capitalspending, it is a sensible time to study the remaining projects and long-term pricing outcomes. Our commodity team has upgraded most of its long-term price forecasts for the base metals on expectations of higher future capital and operating costs. The miners' costs will come under pressure in this more positive price environment, however incumbent producers with structurally lower costs will benefit. We remain positive on the sector and have upgraded Anglo to a buy [from hold] and upgrade Antofagasta to a hold recommendation as a result of these changes.
Two results announcements have seen shares in the companies involved fall sharply. Asos is down 267p at £21.55 as the online fashion group, which issued two profit warnings in six months and suffered a serious warehouse fire, said sales had slowed in the fourth quarter, while investment would hold back full year profits. Oriel Securities said:
At first glance the statementlooks okay but management states that pretax profit next year won't exceed this year's. That's disappointing as the market had expected a material bounce back. It may well be the case that investing in price is the right answer for Asos in the long term, but the probability is that the shares will struggle today. We place [our hold] recommendation under review.
Meanwhile Thomas Cook has fallen 8.5p or 6.5% to 121.5p after the tour operator said it expected to meet full year forecasts, but cautioned on a slowdown in bookings in the German market.
