U.K. Stocks Including HBOS, Diageo, Yell Fall; Schroders Gains

U.K. stocks including HBOS Plc, Diageo Plc (DGE) and Yell Group Plc fell. Schroders Plc (SDR) advanced after Morgan Stanley raised its recommendation on Britain's largest publicly traded money manager.

The benchmark FTSE 100 Index (UKX) sank 12.5, or 0.2 percent, to 5,953.2 at 10:10 a.m. The measure has added 1.3 percent so far this month. The FTSE All-Share Index shed 0.3 percent to 3,047.51 today, while Ireland's ISEQ Index (ISEQ) decreased 0.7 percent to 6,474.5.

HBOS Plc, the U.K.'s largest mortgage lender, lost 2.7 percent to 618 pence. U.K. house prices fell in February in the worst streak of monthly declines since 2000, a sign two interest-rate cuts have yet to support the property market, a report by Nationwide Building Society showed.

Banks seeking to rebuild profit margins passed on less than half of the reduction in the central bank's benchmark rate on the most popular mortgages in January. Consumers are already struggling to cope with a record 1.4 trillion pounds in debt and mortgage approvals dropped in December to the lowest in at least nine years.

The market will be ``slower'' in 2008, Andy Hornby, chief executive officer of HBOS, said Feb. 27.

Diageo slipped 1.3 percent to 1,045 pence after the world's biggest liquor maker was downgraded to ``neutral'' from ``buy'' at Goldman, Sachs & Co. following gains in the past month.

``We do not expect any significant positive news flow over the coming months and believe better buying opportunities exist elsewhere in the sector,'' analysts including Javier Gonzalez-Lastra in London wrote in a note to investors today.

Yell, Schroders

Yell fell for a third day, dropping 3 percent to 235.25. The publisher of the U.K.'s Yellow Pages phone directories slumped 11 percent yesterday after U.S. peer R.H. Donnelley Corp. reduced its earnings forecast and scrapped plans for a dividend.

Bear Steans Cos. cut its recommendation on Yell to ``peer perform'' from ``outperform.''

Schroders jumped 4.8 percent to 985.5 after Morgan Stanley analysts including Bruce Hamilton in London raised their recommendation to ``equal weight'' from ``underweight.

The shares offer ``potential'' after a 15 percent drop in price this month, the analysts wrote in a research note today.

Next Plc (NXT) gained 1.2 percent to 1,321 pence. Britain's third-largest clothing retailer faces ``structural'' problems and may be a takeover target for rivals including Marks & Spencer Plc, Credit Suisse said.

Marks & Spencer may pay a ``significant premium'' for Leicester, England-based Next, London-based Credit Suisse analyst Tony Shiret wrote in a note to investors today. A takeover could ``significantly'' enhance Marks & Spencer's ``strategic position,'' he said.

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

U.K. Companies:

Asos Plc (ASC) sank 5 pence, or 1.9 percent, to 265. The U.K.-based Internet clothing retailer hired former Topshop director Caren Downie to head the women's wear division, the London-based Times reported.

Close Brothers Group (CBG) lost 63.5 pence, or 8.5 percent, to 686.5. The 129-year-old London-based investment bank said it's no longer in talks about a takeover offer for the company.

Connaught Plc (CNT LN) gained 4.25 pence, or 1.1 percent, to 403.75. The U.K. building-maintenance company said its first-half order book was 30 percent higher than last year after it secured more orders to upgrade and maintain low-cost housing.

M.J. Gleeson Plc (GLE) tumbled 45 pence, or 16 percent, to 240. The U.K. home renovator and property developer founded in 1903 said its full-year target could become ``difficult.''

Rank Group Plc (RNK) added 3.75 pence, or 4.1 percent, to 94.75. The second-largest U.K. casino and bingo company said profit more than doubled in 2007 because of a gain on the sale of its Hard Rock unit and it entered an agreement to transfer its pension plan.

United Business Media Plc (UBM) advanced 23.5 pence, or 4.4 percent, to 553.5. The publisher of Information Week and owner of PR Newswire said 2007 profit fell 23 percent. The company said it is ``well placed'' for a ``strong performance'' in 2008.

ZincOx Resources Plc (ZOX) added 9 pence, or 4.4 percent, to 215. The U.K. zinc producer said its Ohio recycling project received approval from the Ohio Environmental Protection Agency.

Irish Companies:

C&C Group Plc (CCR) slid 4.3 cents, or 0.9 percent, to 4.457 euros. The Irish maker of Magners cider said annual sales from continuing operations fell about 9 percent as Britons drank less of the beverage and competition increased.

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

To contact the editor responsible for this story: Daniel Hauck at at dhauck1@bloomberg.net.

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