FTSE 100 Index Retreats; HSBC, Centrica, Thomas Cook Shares Lead Declines

U.K. stocks fell after Centrica Plc (CNA) said profit will grow more slowly than previously predicted, HSBC Holdings Plc (HSBA) said costs soared and Standard & Poor’s downgraded Greece’s credit rating.

HSBC, Europe’s biggest bank, slid 0.5 percent. Centrica, Britain’s largest energy supplier, slumped 3.8 percent. Thomas Cook Group Plc (TCG), Europe’s second-biggest tour operator, sank 2.9 percent after saying its first-half loss widened because of the cost of assisting holidaymakers affected by popular revolts in north Africa.

The benchmark FTSE 100 Index (UKX) fell 34.08, or 0.6 percent, to 5,942.69 at the 4:30 p.m. close in London. The gauge last week posted its biggest weekly drop since March after a slump in commodities prices dragged energy and mining companies lower, overshadowing a bigger-than-forecast increase in U.S. payrolls. The measure today swung between gains of as much as 0.4 percent and losses as much as 0.9 percent. The FTSE All-Share Index (ASX) today slid 0.5 percent, while Ireland’s ISEQ Index decreased 0.2 percent.

“Fears over sovereign debt resurfaced,” said Giles Watts, the head of equities at City Index Ltd. in London. “There remains enough near-term fragility in the market to convince investors not to jump full flight back into riskier asset classes. Today’s numbers from HSBC were slightly concerning regarding the jump in costs the bank has endured.”

S&P lowered Greece’s sovereign-credit rating by two levels to B and said further reductions are possible. Another cut would make Greece the lowest-rated country in Europe.

HSBC, Centrica Slip

HSBC fell 0.5 percent to 648.2 pence. Pretax profit in Europe declined 65 percent to $652 million, reduced by a provision for payment-protection insurance and a “lower contribution” from its investment banking unit, the bank said. The lender said costs as a proportion of income rose to 61 percent from 50 percent. HSBC set aside $440 million to compensate clients who were improperly sold British personal- loan insurance.

Centrica slid 3.8 percent to 303.5 pence. Earnings will grow at a “more modest” rate than predicted because of higher taxes for its production from the North Sea, the company said in a statement today.

Thomas Cook

Thomas Cook slid 2.9 percent to 165.7 pence. The European tour operator said revenue rose 4 percent in the first half of the year to 3.43 billion pounds ($5.6 billion). Earnings were affected by a seasonal operating loss of 166 million pounds in the first six months of its fiscal year due to the effect of disturbances in the Middle East and north Africa.

Inmarsat Plc (ISAT) climbed 4.4 percent to 619 pence. The biggest provider of satellite services to the maritime industry reported a 15 percent increase in first-quarter revenue to $323.9 million.

Kesa Electricals Plc (KESA) rallied 1.4 percent to 139 pence. Europe’s third-largest electronics retailer may get bids from leveraged-buyout firms including PAI Partners SAS, Sky News reported, without saying where it got the information.

Rank Group Plc (RNK) rose 1.9 percent to 151.6 pence after saying that a 150 pence per share offer from Guoco Group Ltd. “significantly undervalues” the operator of Mecca Bingo clubs and Grosvenor casinos.

Misys Plc (MSY) soared 8.4 percent to 343.5 pence as Credit Suisse Group AG reinstated the shares with an “outperform” recommendation.

“The stock’s current valuation is overly discounting the risks associated with the integration of Sophis as well as a turnaround in the company’s core banking software business,” Frederick Grieb, a London-based analyst at Credit Suisse, wrote in a report today. In February, it closed a deal to buy Sophis to expand its operations in treasury and capital markets.

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

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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