U.K.'s Benchmark FTSE 100 Index Drops; Cairn Rises, Morrison Shares Fall
U.K. stocks declined, extending this month’s drop for the benchmark FTSE 100 Index, amid concern the level of sovereign debt in Europe will hamper the economic recovery.
Barclays Plc and HSBC Holding Plc led declining shares, as the FTSE 100 traded near the lowest level since February. William Morrison Supermarkets Plc declined 2.2 percent after the smallest of the U.K.’s four main grocers reported a slowdown in sales growth.
The FTSE 100 fell 27.81 points, or 0.5 percent, to 5,314.12 as of 2:28 p.m. in London, having swung between declines of as much as 1.4 percent and an advance as big as 0.6 percent. The gauge has tumbled 8.7 percent since this year’s peak on April 15 amid concern that Greece’s debt crisis will spread through the region. The FTSE All-Share Index declined 0.4 percent today and Ireland’s ISEQ Index fell 1 percent.
The “correction in risky assets is not over,” Jan Loeys, the London-based global head of strategy at JPMorgan Chase & Co. wrote in a report sent to clients today. “The escalation of the sovereign crisis in the euro area raises downside risks. There are no signs that the debt crisis that engulfed the region is about to subside.”
The U.K. votes in an election today where all three main parties have campaigned on their plans to cut the budget deficit.
The European Central Bank’s President Jean-Claude Trichet resisted pressure from economists to consider buying government bonds to help relieve the euro area’s spreading fiscal crisis. The ECB kept the benchmark interest rate at a record low of 1 percent for a thirteenth month, as predicted by all 58 economists in a Bloomberg News survey. European equity strategist Karen Olney at UBS AG says there is still a “good backdrop” for buying stocks in Europe.
“We remind investors we are still in a recovery,” Olney wrote in a report today. “Chaos can offer a good landscape for value.”
Barclays declined 3.5 percent to 311.35 pence. HSBC, Europe’s largest bank, lost 2.7 percent to 635.1 pence.
Morrison Supermarkets lost 2.2 percent to 272.7 pence. Sales at stores open at least a year rose 0.8 percent, excluding fuel and value-added tax, in the 13 weeks ended May 2, the Bradford, England-based company said today in a statement. That missed the 2 percent median estimate of six analysts surveyed by Bloomberg News and compared with a 4.8 percent gain in the prior quarter.
Cairn Energy Plc rose 3.8 percent to 398.9 pence. Exane BNP Paribas upgraded the shares to “outperform” from “neutral,” saying the stock “remains undervalued” despite its gains since December. Cairn has soared 27 percent since Dec. 1.
Schroders Plc rallied 6.1 percent to 1,389 pence, the biggest gain in two months. The second-largest publicly traded U.K. fund manager by assets said first-quarter pretax profit rose more than sevenfold as funds under management reached a record.