BLBG:U.K. Stocks Decline; Oil Companies’ Drop Offsets Banks
U.K. stocks declined for a third day on concern the global economy is worsening, with a drop in oil and gas companies offsetting a rally in bank shares.
BP Plc (BP/) contributed most to the decline in the benchmark index as oil prices fell. Smith & Nephew Plc (SN/) lost 1.8 percent after Societe Generale SA asked investors to sell the stock. Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc gained at least 1.8 percent each after a report said U.K. regulators relaxed bank capital rules to stimulate lending.
The FTSE 100 Index dropped 23.45 points, or 0.4 percent, to 5,786.80 at 11:53 a.m. in London. The gauge has still climbed 10 percent from this year’s low on June 1 as the European Central Bank agreed on an unlimited bond-buying plan and U.S. unemployment fell to the lowest rate in more than three years. The broader FTSE All-Share Index also slipped 0.4 percent, while Ireland’s ISEQ Index was little changed today.
“The FTSE has slipped lower once again as unease about global growth prospects take hold,” said Chris Beauchamp, a market analyst at IG in London. “Expectations for earnings season are for a general slowdown in revenues, a reflection of the stagnation seen around the world.”
Alcoa, the largest U.S. aluminum producer, kicked off the U.S. earnings season yesterday by cutting its forecast for global consumption of the metal by 1 percentage point on slowing Chinese demand.
Five companies in the FTSE 100 (UKX) Index, including Tesco Plc (TSCO), WPP Plc (WPP) and Wolseley Plc (WOS), are trading without the right to dividend today.
Oil Drops
Oil fell 0.6 percent, declining from a weekly high in New York on speculation that crude stockpiles climbed in the U.S., the world’s biggest user of the commodity.
BP Plc slid 0.8 percent to 434.2 pence, while Royal Dutch Shell Plc (RDSA) lost 0.8 percent to 2,197.5 pence. BG Group Plc (BG/), the U.K.’s third-largest natural gas producer, retreated 0.7 percent to 1,297.5 pence. A gauge of oil and gas stocks in the FTSE 350 Index fell 0.7 percent.
Smith & Nephew, Europe’s largest maker of artificial hips and knees, slipped 1.8 percent to 654.5 pence after SocGen initiated coverage of the stock with a sell rating. The shares are trading without the right to dividend today.
Separately, U.S. medical devices company Biomet Inc. said today it saw some “deceleration in growth” for its orthopaedic hip and knee devices.
Imagination Technology Group Plc, a maker of chip technology for phones and tablet computers, lost 4.5 percent to 480 pence after Credit Suisse AG began coverage of the shares with a sell rating.
FSA Requirement
Banks advanced after the Financial Times reported without saying where it got the information that the Financial Services Authority relaxed a requirement for lenders to meet an end-2013 deadline to achieve a core capital ratio of 10 percent of their assets.
The FSA said on its website Sept. 27 it will allow banks to deduct any increase in their minimum capital requirements from buffers, with the effect that “no bank will be required to hold the additional” reserves needed previously.
Lloyds advanced 3.5 percent to 38.29 pence, RBS gained 1.8 percent to 261.8 pence and Barclays Plc added 0.8 percent to 223.3 pence.
Man Group Plc (EMG) added 2.4 percent to 92.1 pence after the Daily Mail said BlackRock Inc. may buy the company.
The takeover is “possible but not likely,” Peter Lenardos, an analyst at RBC Capital Markets in London, wrote in an e-mailed note. “We do not see the logic of acquiring a company whose funds are underperforming key benchmarks and are experiencing net outflows,” he wrote.
To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
