U.K. Stocks Drop for Fourth Day as BP Tumbles to 14-Year Low; Miners Fall
U.K.’s FTSE 100 Index retreated for a fourth day, the longest losing streak in seven weeks, as BP Plc tumbled to a 14-year low and mining shares fell.
BP tumbled 4.6 percent amid concern hurricanes may hamper efforts to clean up its oil spill in the Gulf of Mexico and as Nomura Inc. said the company may have to raise money to face liabilities from the leak. Kazakhmys Plc and Antofagasta Plc lost more than 3 percent.
The benchmark FTSE 100 retreated 53.76, or 1.1 percent, to 5,046.47 in London, extending the gauge’s biggest weekly retreat in more than a month to 3.9 percent. The FTSE All-Share Index fell 1 percent and Ireland’s ISEQ Index retreated 1.1 percent.
“Investors are still struggling to put a value on BP,” said Anthony Grech, London-based head of research at IG Index. “The threat of a tropical storm hitting the area is yet another reason for the markets to give the shares a wide berth for now.”
The FTSE 100 has lost 13 percent from this year’s high on April 15 amid concern about the fallout from Europe’s debt crisis. The gauge today completed a so-called death cross, a bearish signal that may foreshadow a further drop, according to the head of technical analysis at Mint Equities Ltd.
This week’s selloff has pulled the index’s 50-day moving average down to 5,314.16, below the 200-day moving average of 5,328.31. The last time the gauge formed a death cross pattern, where the 50-day average drops below the 200-day average, was in December 2007, as U.K. stocks began a 45 percent slump through March 2009.
Stocks also fell as U.S. Commerce Department figures showed the world’s largest economy grew at a 2.7 percent annual rate in the first quarter, less than previously calculated, reflecting a smaller gain in consumer spending and a bigger trade gap.
BP dropped 6.4 percent to 304.6 pence, the lowest level since August 1996. The first tropical storm of the Atlantic hurricane season has a 60 percent chance of forming this weekend, with one computer model indicating it could head into the Gulf of Mexico, where BP has a flotilla of vessels trying to clean up its oil spill.
Government forecasters say the hurricane season that started June 1 may be the worst since 2005. Storms will hamper what President Barack Obama has called the biggest environmental cleanup in U.S. history.
Separately, Nomura said BP should sell shares to counter concerns that costs from the oil spill will make it unable to pay creditors. The cost to protect BP bonds against default has climbed even after it agreed to set aside funds over several years to cover spill expenses.
$15 Billion Cash
While BP can access about $15 billion in cash, the Atlantic hurricane season is unsettling for investors, Alastair Syme, an analyst at Nomura Holdings Inc. in London, said in a note to investors today.
Kazakhmys declined 3.9 percent to 1,067 pence. Antofagasta, owner of copper mines in Chile, fell 3.3 percent to 827 pence and Lonmin Plc lost 3.7 percent to 1,523 pence.
The following is a list of companies whose shares may have unusual price changes in U.K. and or Irish markets. Stock symbols are in parentheses.
Avis Europe Plc (AVE LN) sank 6.25 pence, or 18 percent, to 28.5 after the company controlled by Belgian car dealer D’Ieteren SA announced a rights offer to raise approximately 151 million pounds (226 million).
Connaught Plc (CNT LN) plunged 105.2 pence, or 33 percent, to 215 after the biggest U.K. public-housing maintenance company said it expects revenue in this financial year to be impacted by around 80 million pounds following the U.K.’s emergency budget.
Mitie Group Plc (MTO LN), which provides security guards to all courts in England and Wales, lost 8 pence, or 3.7 percent, to 211.3.
Stagecoach Group Plc (SGC LN) gained 3.9 pence, or 2.1 percent, to 194.3 after Deutsche Bank AG raised its recommendation for the operator of the U.K.’s busiest commuter- rail service to “buy” from “hold.”