U.K. stocks retreated in the last hour of trading as Japan was hit by a 7.1-magnitude earthquake, overshadowing gains in banks after Portugal sought a bailout from the European Union.
Cairn Energy Plc (CNE) and Vedanta Resources Plc (VED) slid after the companies extended a deadline for a $9.6 billion deal to acquire Cairn’s Indian unit. Bwin.Party Digital Entertainment Plc tumbled for a second day. HSBC Holdings Plc (HSBA), Europe’s biggest lender, rose 1 percent.
The benchmark FTSE 100 Index (UKX) lost 33.76, or 0.6 percent, to 6,007.37 at the 4:30 p.m. close in London after an earthquake hit 215 miles (345 kilometers) northeast of Tokyo, resulting in warnings of a possible tsunami. Stocks fluctuated earlier as the Bank of England left interest rates at a record low for a 26th month. The FTSE All-Share Index (ASX) and Ireland’s ISEQ Index also dropped 0.6 percent.
Stocks gained for most of the day in Europe as Portugal’s request for an EU bailout bolstered optimism the region’s sovereign-debt crisis may be contained. A measure for bank shares jumped 1.1 percent. Spain today sold three-year bonds at lower borrowing costs than at its previous auction.
“The markets are taking it well because it clears some of the uncertainty in the short term,” Chris Turner, head of strategy at Lombard Street Research Ltd. in London. “Longer term we are still concerned about the sustainability of the Spanish fiscal position given the lack of growth there.”
BOE, ECB Rates
BOE Governor Mervyn King today kept interest rates unchanged as European Central Bank President Jean-Claude Trichet boosted borrowing costs for the first time in almost three years and said the bank will continue to monitor inflation risks “very closely.”
Cairn Energy declined 2.3 percent to 445.9 pence and Vedanta dropped 2.6 percent to 2,431 pence. The two London- listed companies pushed a deadline to May 20 from April 15 to give more time for Vedanta to buy a majority stake in Cairn India Ltd., after India referred the plan to a panel of ministers.
Vedanta, a copper and aluminum company with no experience in producing oil or natural gas, has waited almost eight months to buy as much as 60 percent of Cairn’s Indian unit.
Bwin.Party, which was formed from last month’s combination of PartyGaming Plc and Bwin Interactive Entertainment AG, fell after German states’ prime ministers yesterday proposed a 16.7 percent tax on sports-betting stakes. The shares dropped 15 percent to 142 pence, extending the previous day’s 16 percent decline.
HSBC rose 1 percent to 667.2 pence. Portuguese banks led gains in the European industry today after the southern European country became the third euro-region country to seek a rescue.
Banks were also helped by speculation that the government- sponsored Independent Commission on Banking’s report next week will be less tough than some investors feared.
“The market had been expecting a bailout to come in some form given the looming refinancing hump but this at least reduces the uncertainty,” Jim Reid and Colin Tan, strategists at Deutsche Bank AG, wrote in a report today.
Carpetright Plc (CPR) declined 5.9 percent to 632 pence. The U.K.’s biggest carpet retailer lowered its earnings outlook for the second time in two months as stuttering consumer confidence deters people from renovating their homes.
Halfords Group Plc (HFD) slid 5.1 percent to 350 pence as the retailer reported 13-week same-store sales fell 6.8 percent and said cost pressures are increasing.
Hays Plc (HAS) lost 4.5 percent to 114.1 pence. The U.K.’s largest recruitment company said net fees in its home market dropped 2 percent in the fiscal third-quarter, with fees for public projects in Britain plunging 37 percent due to government spending cuts.
The company sees “little evidence” that private-industry hiring in the U.K. is offsetting government-spending cuts, Finance Director Paul Venables said in an interview on Bloomberg Television’s “On the Move” with Mark Barton.
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