The retail sector came under pressure as information provider Data Explorers highlighted in a report that several retailers have recently seen a rise in the amount of stock on loan to short sellers. Short sellers, many of which are hedge funds and traders, typically make money by borrowing stock from a third party (usually a broker) and selling it, with the intention of buying the shares back at a later date to return to that third party at a lower price.
According to Data Explorers, Carpetright, Home Retail Group and Mothercare have all suffered a spike in the volumes of stock out on loan.
According to Data Explorers, Carpetright, Home Retail Group and Mothercare have all suffered a spike in the volumes of stock out on loan. The increase in stock on loan comes amid speculation the retail sector will demonstrate next week that several companies did not trade well during the festive period.
Carpetright and Home Retail Group are the most shorted stocks, with over 14pc of their total shares out on loan, according to Data Explorers. Meanwhile, Mothercare has 12.3pc of its shares on loan while Dixons Retail has seen 11.3pc of its stock borrowed by short sellers.
Dixons Retail drifted a ½ to 9.7p and Mothercare lost 3.2 to 160p. Home Retail, which Citigroup added to its "least-preferred list" also dipped 3.2 to 90.9p but Carpetright bucked the weak sector trend, edging up 3 to 494.9p.
Overall, the FTSE 100 lost 31.46 points to 5,668.45 while the FTSE 250 fell 88.18 points to 10,273.77 following Italian bank UniCredit's hugely discounted rights issue, which provoked fears of another banking crisis.
"The €7.5bn [£4.8bn rights issue] issue was offered at a discount of 69pc, which is huge," said Joshua Raymond, chief market strategist at City Index.
He added: "The size of the discount tells two distinct tales. Firstly that the Italian bank believes appetite to pick up the issue will be extremely weak, which echoes a lack of shareholder and investor confidence in the bank. And secondly, the fact that they [UniCredit] are willing to offer such a large discount to some may smack of desperation.
"Either way, the read across from the offer itself has been one of surprise by most investors, who have moved to cash in yesterday's gains in banking stocks early as a result," concluded Mr Raymond.
In London, Lloyds Banking Group dropped 0.4 to 26½p. However, Barclays rose 2 to 188.3p as many analysts believe it is likely to perform well over the next twelve months.
Mining stocks gave up some of Tuesday's gains, with Glencore International taking the wooden spoon. The shares fell 13.15 to 405p as the price of copper declined for the first time in four days.
Next lost 85p to £26.56 following a trading update in which the company was cautious about trading in 2012. Elsewhere in the sector, Marks & Spencer dipped 8.2 to 308.8p in sympathy. BSkyB, the country's biggest pay-TV broadcaster, slipped 12 to 730p after a newspaper reported that Apple is "showing interest" in joining the bidding for the next set of English Premier League live broadcast rights, to boost its UK television offering. The newspaper also said in its sports agenda column that Google is expected to make "similar soundings."
On a more positive tack, Amec perked up 1 to 934p. Yesterday Seymour Pierce published a bullish note on the company. Kevin Lapwood, an analyst at Seymour Pierce, said: "Amec has underperformed the market by 15pc in the past year and now trades at a significant discount to its oil service peers. Given the recent strength of the oil price – which should underpin future oil exploration and production activity and the increased activity in new hydrocarbon development activity such as shale gas fracking and oil shales – we believe this is unjustifiably low."
Defensive stocks, though, dominated the leaderboard amid of jitters about further declines in the wider market. United Utilities put on 9 to 620½p and Severn Trent advanced 17p to £15.37.
In the mid-cap index, recruitment companies were in the doldrums following a bearish note from JP Morgan Cazenove. Robert Plant, an analyst at JP Morgan Cazenove, pointed out that Hays delivers its second-quarter trading statement on January 10, and Michael Page its fourth-quarter trading update on January 11.
"We think the outlook for both companies is negative due to the expected slowdown in 2012 of the main economies they are exposed to," said Mr Plant.
He added: "The main reason why Michael Page is our least preferred recruitment company share is that it is the most expensive of the sub-sector ... and we think valuation is too high given the downward pressure on estimates." Michael Page fell 8.3 to 353.4p and Hays lost 0.3 to 66.7p.
However, Domino's Pizza topped the FTSE 250 leaderboard, rising 27.7 to 441½p following a trading update that met market expectations.
Small cap Eurasia Mining leapt 0.1 – 23pc – to 0.8p. It was not clear why the shares rose so much. The company eventually said in statement to the market that: "the directors of the company note the movement in the company's share price today. The directors can confirm that they are not aware of any reason for the change."
Stockbroker Panmure Gordon presented the market with its top picks for the year. Industrials analyst Oliver Wynne-James reckons investors should buy Bodycote although this idea is not for the "faint hearted". "The valuation is deeply discounted and already prices in a full double dip. In any case ... a clean balance sheet should help it to successfully navigate through 2012. Some corporate activity in the stock is now a possibility given that the five-year compounded returns are sizeable and sit well ahead of the sector," said Mr Wynne-James. Still Bodycote dipped 3.1 to 277.9p yesterday. Meanwhile, Rachel Waring and Mark Hughes advised investors to snap up Galliford Try - their top pick of 2011. "In January 2011 we picked Galliford Try as our 'Stock of the Year'. Since then, the shares have risen by 50pc and paid the largest dividend in the sector, outperforming the FTSE All Share by 55pc. For the first time in this analyst's stock-broking career, the 2011 pick is rolled over to become the 2012 key pick. Galliford is the most undervalued stock in the sector." Galliford Try put on 11.2 to 473p.
"The €7.5bn [£4.8bn rights issue] issue was offered at a discount of 69pc, which is huge," said Joshua Raymond, chief market strategist at City Index.
He added: "The size of the discount tells two distinct tales. Firstly that the Italian bank believes appetite to pick up the issue will be extremely weak, which echoes a lack of shareholder and investor confidence in the bank. And secondly, the fact that they [UniCredit] are willing to offer such a large discount to some may smack of desperation.
"Either way, the read across from the offer itself has been one of surprise by most investors, who have moved to cash in yesterday's gains in banking stocks early as a result," concluded Mr Raymond.
In London, Lloyds Banking Group dropped 0.4 to 26½p. However, Barclays rose 2 to 188.3p as many analysts believe it is likely to perform well over the next twelve months.
Mining stocks gave up some of Tuesday's gains, with Glencore International taking the wooden spoon. The shares fell 13.15 to 405p as the price of copper declined for the first time in four days.
Next lost 85p to £26.56 following a trading update in which the company was cautious about trading in 2012. Elsewhere in the sector, Marks & Spencer dipped 8.2 to 308.8p in sympathy. BSkyB, the country's biggest pay-TV broadcaster, slipped 12 to 730p after a newspaper reported that Apple is "showing interest" in joining the bidding for the next set of English Premier League live broadcast rights, to boost its UK television offering. The newspaper also said in its sports agenda column that Google is expected to make "similar soundings."
On a more positive tack, Amec perked up 1 to 934p. Yesterday Seymour Pierce published a bullish note on the company. Kevin Lapwood, an analyst at Seymour Pierce, said: "Amec has underperformed the market by 15pc in the past year and now trades at a significant discount to its oil service peers. Given the recent strength of the oil price – which should underpin future oil exploration and production activity and the increased activity in new hydrocarbon development activity such as shale gas fracking and oil shales – we believe this is unjustifiably low."
Defensive stocks, though, dominated the leaderboard amid of jitters about further declines in the wider market. United Utilities put on 9 to 620½p and Severn Trent advanced 17p to £15.37.
In the mid-cap index, recruitment companies were in the doldrums following a bearish note from JP Morgan Cazenove. Robert Plant, an analyst at JP Morgan Cazenove, pointed out that Hays delivers its second-quarter trading statement on January 10, and Michael Page its fourth-quarter trading update on January 11.
"We think the outlook for both companies is negative due to the expected slowdown in 2012 of the main economies they are exposed to," said Mr Plant.
He added: "The main reason why Michael Page is our least preferred recruitment company share is that it is the most expensive of the sub-sector ... and we think valuation is too high given the downward pressure on estimates." Michael Page fell 8.3 to 353.4p and Hays lost 0.3 to 66.7p.
However, Domino's Pizza topped the FTSE 250 leaderboard, rising 27.7 to 441½p following a trading update that met market expectations.
Small cap Eurasia Mining leapt 0.1 – 23pc – to 0.8p. It was not clear why the shares rose so much. The company eventually said in statement to the market that: "the directors of the company note the movement in the company's share price today. The directors can confirm that they are not aware of any reason for the change."
Stockbroker Panmure Gordon presented the market with its top picks for the year. Industrials analyst Oliver Wynne-James reckons investors should buy Bodycote although this idea is not for the "faint hearted". "The valuation is deeply discounted and already prices in a full double dip. In any case ... a clean balance sheet should help it to successfully navigate through 2012. Some corporate activity in the stock is now a possibility given that the five-year compounded returns are sizeable and sit well ahead of the sector," said Mr Wynne-James. Still Bodycote dipped 3.1 to 277.9p yesterday. Meanwhile, Rachel Waring and Mark Hughes advised investors to snap up Galliford Try - their top pick of 2011. "In January 2011 we picked Galliford Try as our 'Stock of the Year'. Since then, the shares have risen by 50pc and paid the largest dividend in the sector, outperforming the FTSE All Share by 55pc. For the first time in this analyst's stock-broking career, the 2011 pick is rolled over to become the 2012 key pick. Galliford is the most undervalued stock in the sector." Galliford Try put on 11.2 to 473p.
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