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FTSE Falls from 5-Year High

THURSDAY MARKET UPDATE: Shire and AMEC contribute to a 0.5% decline on the FTSE 100, ending a four-day market rally

Alanna Petroff 14 February, 2013 | 6:15PM

The FTSE 100 and FTSE 250 indices both took a tumble on Thursday, ending a four-day rally that saw the benchmark FTSE 100 hit a five-year high.

The FTSE 100 dipped down by 32 points, or 0.5%, to close at 6,327. The FTSE 250 fell back by 103 points, or 0.8%, to close at 13,500.

The two main companies that contributed to the weak performance on the large-cap index were the pharmaceutical company Shire (SHP) and the engineering group AMEC (AMEC).

Shares in Shire suffered a 5.5% loss after the US Food and Drug Administration (FDA) approved a generic version of its blockbuster Adderall XR drug, which is used to treat attention deficit hyperactivity disorder (ADHD).

Weaker-Than-Expected Eurozone GDP

On the economic front, eurozone GDP shrank by 0.6% in the fourth-quarter from third-quarter levels. Economists had expected a more modest 0.4% decline. GDP was off by 0.9% year-over-year. Germany and France also reported worse-than-expected national level GDP data.

"The GDP figures from across the Channel were always going to be lacklustre, but perhaps investors weren’t entirely prepared for them all to be so bad," said Chris Beauchamp, a market analyst at IG.

"Germany’s figures are the main worry, and help to reignite fears that the eurozone crisis is back. It never really left us, of course, but we had been content to ignore it for as long as possible," he said.

Buffett + Heinz = Love

Meanwhile, the M&A market was hot on Thursday.

Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B) announced that it has agreed to acquire packaged foods firm HJ Heinz (HNZ) in a $28 billion deal that has been put together in conjunction with 3G Capital, a Brazilian private equity firm. Early indications are that Berkshire and 3G Capital will be putting up most of the cash portion of the deal (equal to $23.2 billion), with Warren Buffett noting that Berkshire and 3G Capital will each be directing $4 billion toward the joint buyout, with Berkshire also paying $8 billion for preferred shares. The rest of the cash portion of the deal will be covered by debt financing. Berkshire shares were up less than 1% on the news while Heinz shares soared by 20%.

US Airways (LCC) and AMR (AAMRQ) also announced a merger agreement on Thursday to create the world's largest airline.

To see the top winners and losers on the FTSE 100 each day, check out Morningstar's Heat Map.

This article was written with notes from Morningstar's Jeremy Glaser.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
AMEC PLC542.50 GBX-2.25
Berkshire Hathaway Inc B165.48 USD0.21
Berkshire Hathaway Inc Class A248,121.00 USD0.12
Shire PLC4,710.00 GBX-2.35
About Author Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.