U.K. Stocks Fall; Weir Group Retreats as Barclays Shares Climb
Stock Chart for Weir Group PLC/The (WEIR)
U.K. stocks fell for a second day as a report showed that inflation accelerated to a two-year high in January.
Weir Group Plc slid 1.9 percent after Citigroup Inc. downgraded the shares. Barclays Plc climbed 5.8 percent after posting results that beat analysts’ estimates. Premier Foods Plc surged 17 percent after the maker of Hovis bread and Ambrosia Devon Custard said profit advanced.
The benchmark FTSE 100 Index declined 0.4 percent to 6,037.08 at the 4:30 p.m. close in London. Even so, the gauge has rallied 2.3 percent so far this year. The FTSE All-Share Index also decreased 0.4 percent today, while Ireland’s ISEQ Index added 0.2 percent.
U.K. inflation accelerated to 4 percent in January, the fastest pace since November 2008 and double the central bank’s target, matching the median forecast of 30 economists in a Bloomberg News survey. That forced Bank of England Governor Mervyn King to write to Chancellor of the Exchequer George Osborne to explain the bank’s interest-rate policy. King presents his quarterly economic forecasts in London tomorrow.
“The concern to our minds is that the risk from commodity price increases combined with tax-push inflation has masked the underlying inflationary tendencies within the U.K. economy,” Gerard Lane, an equity strategist at London-based Shore Capital Group Ltd., wrote in an e-mailed note. “The pressure on rates to move higher could well be too much to bear for the Bank of England despite fiscal austerity.”
Weir, Xstrata Fall
Weir dropped 1.9 percent to 1,730 pence. Citigroup downgraded the world’s biggest maker of pumps for the mining industry to “hold” from “buy,” saying “the share price is now more in line with its peers and as such we see more limited near-term upside.”
Xstrata Plc dropped 2.4 percent to 1,470 pence. The mining company halted output at its Ulan mine in New South Wales, Australia, after heavy rain caused flooding and delayed deliveries to some customers.
Barclays climbed 5.8 percent to 328.8 pence. Britain’s third-largest bank said 2010 net income fell to 3.56 billion pounds ($5.74 billion), beating the average analyst estimate of 3.2 billion pounds, as writedowns shrank and investment-banking profit almost doubled.
Premier Foods surged 17 percent to 25.8 pence, its highest price since May last year. The company said full-year trading profit rose 0.6 percent compared with a year earlier, to 311 million pounds.
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