FTSE 100 Benchmark Declines; Mining Companies, TUI Travel, Barclays Drop

U.K. stocks fell for the first time in eight days, led by mining companies and banks, as concern lingered that economic growth around the world is slowing.

BHP Billiton Ltd. and Rio Tinto Group retreated as Australian Prime Minister Julia Gillard clinched a deal to keep power. TUI Travel Plc, Europe’s largest travel operator, declined 1.5 percent after Goldman Sachs Group Inc. downgraded its stance on the shares. Barclays Plc lost 2.7 percent as Britain’s third-largest bank named President Robert Diamond as chief executive officer, succeeding John Varley.

The benchmark FTSE 100 Index declined 31.37, or 0.6 percent, to 5,407.82 at the 4:30 p.m. close of trading in London. The gauge of Britain’s 100 largest companies had rallied for seven days as data from the U.S. and China helped ease concern that the global economic recovery is faltering. The FTSE All-Share Index retreated 0.6 percent today and Ireland’s ISEQ Index lost 0.9 percent.

“Market sentiment remains notably fragile, with investors deciding to book recent profits rather than remain long,” said Richard Hunter, the head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. “The return to risk aversion is likely to continue until such time as the strength of the global economic recovery becomes evidently sustainable. In the meantime, the likes of the banks have inevitably taken a hit, whilst the Australian political situation is being seen as less than positive for some of the mining majors.”

Miners

BHP Billiton and Rio Tinto are set to pay higher taxes in Australia after Julia Gillard’s Labor party today won support to form a minority government, following the closest election in 70 years. BHP shares lost 1.4 percent to 1,892.5 pence. Rio Tinto declined 1.8 percent to 3,447.5 pence. The shares were also weakened by a 2.3 percent decline in copper traded on the London Metal Exchange.

Royal Dutch Shell Plc, Europe’s biggest oil company, sank 1.3 percent to 1,803 pence, tracking a slump in crude oil prices.

TUI Travel retreated 1.5 percent to 218.2 pence. Goldman Sachs downgraded the shares to “neutral” from “buy.”

Barclays lost 2.7 percent to 314 pence as the bank named Diamond as Chief Executive Officer.

Allied Irish Banks Plc and Bank of Ireland Plc lost 5.8 percent to 76 cents and 5.9 percent to 72 euro cents, respectively. The Irish lenders had their ratings cut to “neutral” from “outperform” at Dublin-based securities group Davy, which cited concerns over whether the government bank guarantee will be extended.

De La Rue

De La Rue Plc, the world’s biggest printer of banknotes, sank 3.2 percent to 681 pence, the biggest decline in almost a month. The company said a breach in banknote paper quality will clip first-half pretax profit by at least 35 million pounds ($53 million).

London Stock Exchange Group Plc slid 1.9 percent to 681.5 pence. Xavier Rolet, chief executive officer of LSE, said the outlook for trading volume remains “quite subdued.” Rolet was speaking in an interview on Bloomberg Television’s ‘On The Move’ with Francine Lacqua.

Abcam Plc, the supplier of antibodies used in biotechnology products, slumped 2.8 percent to 1,643 pence after saying it remains cautious due to the pressure on governments to reduce their deficits and the potential for reductions in research funding which may impact its business.

British Airways

British Airways Plc gained 2.8 percent to 227 pence as Chief Executive Officer Willie Walsh said he would resume merger talks with Qantas Airways Ltd. if the Australian company was interested, the Australian Financial Review reported. Still, there wasn’t “any evidence” that Qantas Chief Executive Officer Alan Joyce wanted to pursue a deal at this stage, Walsh said in an interview with the newspaper.

Invensys Plc climbed 7.4 percent to 269.2 pence after the Daily Telegraph reported that the British maker of control panels for Whirlpool washing machines is a takeover target for potential acquirers including ABB Ltd., General Electric Co. and Emerson Electric Co.

Ashtead Group Plc advanced 1.8 percent to 93.65 pence after the third-largest U.S. and U.K. construction equipment-rental company said pretax profit climbed 35 percent to 11.9 million pounds in its fiscal first quarter after reducing its fleet to pare costs.

Micro Focus International Plc soared 5.6 percent to 334.5 pence as the U.K. business software maker said it appointed Mike Phillips as chief financial officer with immediate effect.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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