By Steve Goldstein
LONDON (Dow Jones)--Moves by Qatar's sovereign-wealth fund dominated London's market on Tuesday, with Barclays sliding after the group sold down its stake, but J Sainsbury rallying on hopes the Middle Eastern investors would use the funds to increase their holdings in the grocery chain.
Barclays (BCS) shares dropped 4.8% to 343 pence.
Qatar Holding sold 379 million shares at 360 pence each, and at the same time, exercised an equivalent amount of warrants at 197.775 pence each, giving the investment group a 615 million pound profit.
"I think it is unhealthy to have too big a minority stake in a company for too long, as it is without overall control," said David Buik of BGC Partners. "Qatar, whilst remaining long-term holders, is quite rightly banking some profits."
Barclays will record a 750 million pound profit on the sale of warrants.
Speculation immediately turned to a possible offer for J Sainsbury , which rallied 5.4% and is now more than 10% above levels from last week when speculation of renewed Qatari interest first appeared.
The Qatar government already holds 25.8% of Sainsbury from a previous attempt to buy the U.K. grocery chain.
"Sainsbury is different as it could be a total takeover," Buik said of the Qatari holdings there.
More broadly, the U.K. FTSE 100 weakened 0.7% to 5,243.40, after hitting a 13-month high in the previous session.
Elsewhere, shares of infrastructure-software firm Autonomy dropped 8.7% after sticking to 2009 guidance but reporting a third-quarter profit that benefited from unusually low taxes.
"We are unclear as to why the company did not specify that [previous] guidance incorporated such assumptions, or identify this in the trading statement," said David Toms, an analyst at Numis Securities.
On the plus side, shares of media group Pearson (PSO) rose 4.4% after it said it's trading ahead of expectations and raised its fiscal-year guidance.
Its education business is performing ahead of expectations despite challenging conditions in U.S. school publishing, the firm said.
Outside the FTSE 100, PartyGaming slumped 15.6% to 240 pence after an investment fund run on behalf of the company's founder, Anurag Dikshit, sold 75 million shares at 250 pence to institutional investors.
ARM Holdings (ARMHY), the U.K. microchip designer, rose 1.8% after upbeat results from Apple, one of its clients.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274