Resolution, LSE set for FTSE 100 exit on March 10

By Jon Hopkins

LONDON, March 8 (Reuters) - Two financial companies, insurance-focused takeover vehicle Resolution and the London Stock Exchange look set for demotion from the FTSE 100 share index at the next quarterly index review, scheduled for March 10, based on data from FTSE.

As at the market close on Friday, Resolution and the LSE were both below 111th position in the FTSE indexes calculations, which are based on market capitalisation.

Mid-cap pest control to parcel deliveries firm Rentokil Initial and South African-based financial services group Investec were in pole position to move up to the blue chip index, both being above the 90th place based on Friday's close.

Companies outside the FTSE 100 that grow to rank among the 90 largest by market capitalisation are automatically promoted into the blue chip index, while the FTSE 100 firms with the lowest value or that fall to 111th spot or below drop into the FTSE Midcap 250 index.

Resolution's share price has fallen by around 20 percent since the beginning of the year having first been offered to investors at 100 pence in a December 2008 flotation that raised 600 million pounds ($904.8 million) to fund takeovers.

The company, which aims to buy and merge at least three life insurers or asset managers before selling or listing the enlarged group in 2012, has so far completed just one deal, last year's 1.8 billion-pound purchase of insurer Friends Provident, although a number of potential takeovers have been mooted.

LSE shares are just 1.5 percent below their level at the start of the year but have underperformed a near 3.5 percent rise in the FTSE 100 index, with tough market conditions and heightened competition impacting the firm.

LSE unveiled a 9 percent decline in third-quarter revenue with its last trading update at the end of January and since then it has joined forces with banks operating alternative trading platform, Turquoise in a bid to stave off competition.



PESTS PROSPER

In contrast Rentokil Initial's shares, which were only demoted from the blue chip index in the last resuffle in December, have risen over 15 percent in the year to date.

The support services firm's stock got a strong boost in the middle of February when it posted a better than expected 54 percent jump in 2009 pretax profit as Chief Executive Alan Brown's cost-focused turnaround strategy delivered.

Meanwhile, Investec shares have jumped 22 percent since the start of the year, riding the coat-tails of the equity market's recovery although nine-month results from the firm at the end of January were pretty static.

However, a number of brokers, including Goldman Sachs and Morgan Stanley have upgraded ratings for Investec in the wake of the numbers, saying there was more conviction that the group's earnings will trough in 2010 as impairments peak.

Index compiler FTSE will formally announce the changes to the FTSE UK index series after the market close on Wednesday, March 10.

The review uses the closing prices from Tuesday, but the changes have to be confirmed by a FTSE committee on Wednesday.

The index changes will be implemented from the start of business on Monday, March 22.

(Editing by Greg Mahlich) Keywords: MARKETS BRITAIN STOCKS/FTSE REJIG ([e-mail]; [phone]; Reuters Messaging:[e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.