BLBG:U.K. Stocks Drop Following Euro-Zone Manufacturing Report
U.K. stocks fell, following three weeks of gains, as a report showed the euro area’s manufacturing industries grew at a slower-than-expected pace this month and investors assessed the result of Germany’s federal election.
National Grid Plc (NG/) slipped 1.5 percent after UBS AG lowered its rating on the energy-network operator. Randgold Resources Ltd. (RRS) lost 2 percent as an index of mining companies retreated. Aberdeen Asset Management Plc (ADN) climbed 2.4 percent after predicting that pretax profit for its financial year will reach the upper end of analysts’ estimates.
The FTSE 100 Index (UKX) dropped 18.68 points, or 0.3 percent, to 6,577.75 at 10:45 a.m. in London. The equity benchmark has still risen 2.6 percent so far this month as Chinese economic reports beat forecasts and the Federal Reserve unexpectedly refrained from reducing its monthly asset purchases. The FTSE All-Share Index lost 0.2 percent today, while Ireland’s ISEQ Index added 0.3 percent.
“The market’s digesting a number of factors: the German election, last week’s Fed decision and various data,” Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London, said by telephone. “The Chinese data was reasonably positive.”
In the euro area, a measure of manufacturing slipped to 51.1 in September from 51.4 in August. That fell short of the median economist forecast for a reading of 51.7. A gauge of growth in services industries climbed to 52.1 from 50.7. That exceeded the median estimate of 51. Readings above 50 mean that activity increased.
Germany’s Election
In Germany, Angela Merkel’s Christian Democratic Union and its Bavarian allies won 41.5 percent of the vote in federal elections yesterday, according to results from all 299 districts. That still leaves her short of a majority. Merkel needs to find a new coalition partner after the Free Democrats gained just 4.7 percent, less than the 5 percent threshold needed to win seats in the lower house of parliament.
In China, the world’s second-largest economy, a manufacturing index rose to a six-month high in September. The first reading of 51.2 for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics exceeded the 50.9 median estimate of 14 economists surveyed by Bloomberg News.
National Grid slipped 1.5 percent to 747.5 pence. UBS cut its rating to neutral from buy, saying that the current share price already reflects expected growth in the value of its assets. The brokerage also lowered its price forecast to 740 pence from 800 pence.
Randgold, Polymetal
Randgold and Polymetal International Plc, which both mine previous metals, lost 2 percent to 4,581 pence and 2.5 percent to 652 pence, respectively. The price of gold dropped as much as 3 percent on Sept. 20, extending its decline after the close of European equity markets.
Aberdeen climbed 2.4 percent to 396.6 pence. The Scottish fund manager predicted that pretax profit for the year ending Sept. 30 will reach the upper end of analysts’ estimates of 431 million pounds ($691 million) to 477 million pounds.
Croda International Plc (CRDA) gained 1.1 percent to 2,709 pence. Credit Suisse Group AG raised the world’s second-largest maker of cosmetics ingredients to outperform from neutral, meaning that investors should buy the shares. The brokerage said the company has moved into a period of growing sales.
To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
