Jan. 30 (Bloomberg) -- U.K. stocks dropped, led by Royal Bank of Scotland Group Plc and Barclays Plc. Citigroup Inc. lowered its price estimates for Britain's second- and third- biggest banks, citing the risk of a U.K. recession.

Standard Life Plc fell after the insurance company reported sales that missed analysts' estimates. Vodafone Plc led rising shares after Merrill Lynch & Co. added the stock to its ``Europe 1'' list, saying the decline in its share price is a ``buying opportunity.''

The FTSE 100 fell 47.9, or 0.8 percent, to 5,837.3. The FTSE All-Share Index lost 0.7 percent to 2,983.27. Ireland's ISEQ Index added 0.5 percent to 6,755.88.

Royal Bank of Scotland slipped 3.6 percent to 385.25 pence, and Barclays dropped 2.6 percent to 478.5 pence. Citigroup lowered its estimate for Royal Bank's shares by 13 percent to 350 pence and reduced Barclays by 11 percent to 400 pence.

``Declining business confidence, weak retail sales and falling mortgage volumes'' show that ``the U.K. is facing a significant economic slowdown,'' analysts including London-based Tom Rayner wrote in a note dated today.

The brokerage maintained its ``sell'' recommendation on both stocks.

Standard Life decreased 1.8 percent to 224 pence. New sales in the U.K. fell 20 percent to 2.92 billion pounds ($5.8 billion), missing analysts' estimates of 3.04 billion pounds, the insurer wrote in a statement today.

Questions

Standard Life is facing questions about its top management after announcing last night that insurance head Trevor Matthews, 55, is leaving to be chief executive officer of Friends Provident Plc, the U.K. insurer that is weighing a sale of its assets.

Friends Provident sank 4.4 percent to 155.2 pence. Prudential Plc, the U.K.'s second-largest insurer, lost 2 percent to 640.5 pence.

Vodafone, the world's biggest mobile-phone company by sales, climbed 1.8 percent to 176.9 pence.

``We expect Vodafone to outperform in 2008'' and the decline in the value of the stock this year is a ``buying opportunity,'' London-based analyst Graham Ruck wrote in a note to clients today. Through yesterday, the stock had lost 7.5 percent in 2008.

Rio Tinto Group increased 3.2 percent to 4,819. The world's third-largest mining company rose on speculation it agreed to ``open its books'' to suitor BHP Billiton Ltd.

``We are hearing BHP have reached an agreement to open books of Rio at 3.5 shares to 1 Rio'' share, MF Global wrote today in an e-mail to clients. That's up from a proposal of 3 BHP shares for every one Rio stock, which was rejected in November.

Rio spokesman Nick Cobban and BHP spokesman Illtud Harri both declined to comment when contacted by phone.

The following stocks also rose or fell in the U.K. markets. Stock symbols are in parentheses.

Mitchells & Butlers Plc (MAB LN) surged 72 pence, or 18 percent, to 473, the most in almost two years, after the owner of the O'Neill's pub chain said an undisclosed number of potential bidders have expressed an interest in the company.

Oakdene Homes Plc (OKD LN) slumped 33.5 pence, or 34 percent, to 66. Shares of the U.K. homebuilder that develops property in southern England had a record drop after the company said full-year profit was ``materially'' below analysts' estimates.

Shire Plc (SHP LN) lost 36 pence, or 3.9 percent, to 899. The U.K.'s third-largest drugmaker was downgraded to ``neutral'' at Goldman, Sachs & Co. and was removed from the brokerage's ``conviction buy'' list.

``We no longer anticipate acceleration in Vyvanse prescription trends,'' Goldman wrote. Vyvanse is a successor to Adderall XR for attention deficit hyperactivity disorder.

Thomas Cook Group Plc (TCG LN), Europe's second-biggest tour operator, climbed 3 pence, or 1.2 percent, to 263 after saying net income rose 27 percent to 224.1 million euros ($331 million) and said summer vacation bookings have been unhurt by slower consumer spending.

To contact the reporters on this story: Sarah Thompson in London at sthompson17@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: January 30, 2008 12:10 EST