Sept. 3 (Bloomberg) -- U.K. stocks retreated, led by Vodafone Group Plc after Credit Suisse Group AG said it expects the world's largest mobile-phone company to miss guidance.

Barclays Plc led banks lower after Royal Bank of Scotland Group Plc advised investors sell the shares, saying the U.K.'s third-biggest bank may need to raise as much as 7.5 billion pounds ($13.3 billion).

Punch Taverns Plc declined after the U.K.'s largest pub owner reported declining revenue and said it will suspend its dividend to conserve cash as Britons stay away from pubs. Enterprise Inns Plc also fell.

The FTSE 100 Index dropped 121, or 2.2 percent, to 5,499.7. The FTSE All-Share Index declined 2.1 percent and Ireland's ISEQ Index retreated 1.8 percent.

Vodafone slid 1.8 percent to 141.6 pence after Credit Suisse cut its recommendation to ``neutral'' from ``outperform.''

``We believe Vodafone is likely to slightly miss its new revenue guidance on an underlying basis,'' the analysts wrote in a research note dated today, ``and could slightly miss the lower end of its earnings before interest and tax guidance.''

``Vodafone Spain could shrink 4-5 percent year-on-year, worse than consensus,'' they added. ``We could see more economic pressure on mobile demand beyond Spain, particularly in the U.K. and Ireland.''

Barclays lost 3.7 percent to 350.25 pence. While the London-based bank's so-called tangible common equity is in line with U.K. banks it's low compared with rival securities firms, London-based RBS analyst Ian Smillie wrote in a research note to clients today.

Punch Taverns

``A deeply ingrained performance-led culture facilitated the generation of 8.3 billion pounds of economic profit over the last four years,'' Smillie wrote. ``It has, however, also led Barclays to a higher level of balance-sheet gearing than peers, an uncomfortable position in the current environment of financial system de-leveraging and heightened external scrutiny of banks' balance sheets.''

HBOS Plc, the U.K.'s biggest mortgage bank, slid 2.2 percent to 303.25 pence.

Punch fell 12 percent to 278.25 pence. Full-year sales for pubs open at least 12 months slipped 3.3 percent at outlets the company runs itself, while revenue from pubs leased to tenant managers slid 3.4 percent on that basis in the 53 weeks ended Aug. 23, Burton-Upon-Trent, England-based Punch said today.

Punch, which said profit will be ``in line'' with analysts' estimates for the year, will skip this year's dividend to make sure it's able to repay convertible debt due in 2010.

Enterprise Inns, Britain's second-biggest pub landlord, plunged 8.8 percent to 280.25 pence.

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

Cable & Wireless Plc (CW/ LN) lost 4.5 pence, or 2.5 percent, to 174.6. Prudential Plc, the U.K.'s biggest insurer by market value, will take responsibility for more than 1 billion pounds of pension assets from the U.K.'s second-biggest phone company.

DSG International Plc (DSGI LN) added 4.25 pence, or 8.1 percent, to 57 even after the U.K.'s largest consumer electronics retailer said revenue decreased 7 percent in the first 16 weeks. The stock may be a takeover target, according to traders and analysts including London-based John Guy at MF Global Securities.

DS Smith Plc (SMDS LN) slid 6 pence, or 4.4 percent, to 129.5. The owner of the Spicers office products brand said first-quarter business is ``in line'' with forecasts as improving results from continental Europe offset slowing demand in the U.K.

GlaxoSmithKline Plc (GSK LN) slid 32 pence, or 2.4 percent, to 1,295. Europe's biggest drugmaker sued Lupin Ltd., claiming the Indian company's plan to sell a generic version of the AIDS drug Combivir infringes a U.S. patent.

Signet Group Plc (SIG LN), the world's largest jewelry- store owner, rose 2 pence, or 3.1 percent, to 66.75. The company kept its first-half dividend at 96 cents a share, even after second-quarter profit fell 48 percent.

Spirent Plc (SPT LN) dropped 7.75 pence, or 9.4 percent, to 75. Sherborne Investors, the phone-equipment maker's biggest shareholder, put 75 million shares on sale.

Unilever (ULVR LN) dropped 52 pence, or 3.4 percent, to 1,490 after JPMorgan Cazenove Ltd. lowered the world's second- largest consumer-products company to ``underperform'' from ``outperform'' as costs increase and consumer spending falls.

Wolseley Plc (WOS LN) decreased 12.5 pence, or 2.6 percent, to 473. The world's biggest distributor of plumbing and heating gear was downgraded by Deutsche Bank AG, which said the stock has gained too much on speculation that a U.S. unit may be sold.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

Last Updated: September 3, 2008 12:09 EDT