BLBG:U.K. Stocks Fall, Led by Banks, Commodity Companies; G4S Climbs
U.K. stocks dropped for a third day as Greek Prime Minister George Papandreou’s call for a referendum on the European bailout raised concern that efforts to avoid a default will be derailed.
Barclays Plc (BARC) and Royal Bank of Scotland Group Plc (RBS) sank more than 7 percent. BHP Billiton Ltd. (BHP) and Antofagasta Plc (ANTO) fell more than 3 percent as metals prices slid following a decline in Chinese manufacturing to the lowest level since February 2009. G4S Plc (GFS) advanced 2.9 percent after the company abandoned its plan to buy ISS A/S.
The benchmark FTSE 100 Index (UKX) fell 134.82, or 2.4 percent, to 5,409.4 as of 8:45 a.m. in London. The gauge advanced 8.1 percent in October, the biggest gain in two years, after euro- area policy makers expanded the region’s bailout fund ahead of this week’s Group of 20 summit in France. The FTSE All-Share Index lost 2.4 percent today and Ireland’s ISEQ Index slipped 2.6 percent.
“Papandreou made matters a whole lot more uncertain by announcing that he would be putting the new bailout plan to a referendum of the Greek people,” said Michael Hewson, a market strategist at CMC Markets in London. “The resulting fallout could well result in a complete meltdown of the European banking system and throw Europe into turmoil.”
Papandreou’s gambit risks pushing the country into default if voters reject the financial accord and raises the ante with dissidents inside his own party. Papandreou’s popularity has plunged after austerity measures cut pensions and wages, increased taxes and sparked a wave of social unrest.
G-20 Summit
Leaders from the G-20 meet at a summit on Nov. 3-4 in Cannes, France, a week after the euro area’s authorities pledged to expand their rescue fund to 1 trillion euros ($1.4 trillion). The have already sought financial help from China and cooperation from the International Monetary Fund.
Britain’s economic recovery will continue to falter in the current quarter after it struggled to build momentum in the previous three months, economists said.
Gross domestic product rose 0.3 percent in third quarter compared with a 0.1 percent increase in the second quarter, according to the median of 36 forecasts in a Bloomberg News survey. The Office for National Statistics will publish the data at 9:30 a.m. in London. Manufacturing probably stagnated in October and services growth slowed, according to separate surveys of economists before reports this week.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
