Merrill cuts Footsie forecast by 10%
MERRILL Lynch has became the latest City institution to slash its year-end forecast for the FTSE 100 index. The bank now expects the Footsie to end 2002 at 4500, compared with an earlier prediction of 5000.
In a note to clients, Merrill's equities team said: 'The new targets are very conservative, assuming 2003 earnings-per-share levels around 1999 levels and thus allowing for significant downside surprises in economic growth and earnings.' It also cut its forecasts for Continental indices.
The move follows similar downgrades by other banks. Barclays now sees the Footsie ending the year at 4200, while Deutsche Bank's prediction is 4800.
Jeremy Batstone at NatWest Stockbrokers has pencilled in 5500, but said there was a 'strong likelihood' - this will be cut when his forecasts are reworked next month.
Meanwhile, Japanese stocks were back in freefall as Tokyo's benchmark share index, the Nikkei 225, dived below the psychologically-important 9500 level. Hit by fresh fears about the strength of global economic recovery following news last week that US consumer confidence is still deteriorating, the Nikkei 225 Average hit a low of 9499.51 before clawing back some of the lost ground to end down 1.9% at 9599.10.
A warning from credit rating agency Standard & Poor's that further delays in implementing structural reforms could result in a rating downgrade also weighed on the market.
