U.K. stocks slid for a second day, dragging the benchmark FTSE 100 Index (UKX) to a three-month low, amid concern that the European debt crisis is worsening.
Anglo American Plc (AAL) retreated 1.8 percent, Lonmin Plc (LMI) sank 3.4 percent and BP Plc slid 1.8 percent as base metals declined. Premier Farnell Plc (PFL) tumbled 8.8 percent after saying it sees second-quarter sales growth in line with its forecast.
The FTSE 100 fell 0.8 percent to 5,698.81 at the 4:30 p.m. close in London, the lowest level since March 17. The gauge is heading for a fourth straight week of declines as U.S. jobs data trailed economists’ forecasts and concern mounted that Greece will fail to repay all of its debt. The FTSE All-Share Index (ASX) also fell 0.8 percent today, as did Ireland’s ISEQ Index.
“It is difficult to continually kick the can down the road when the can is breaking up in front of your boot,” Jim Reid, a strategist at Deutsche Bank AG, wrote in an e-mail today. “That is how the Greek situation appears at the moment. The most likely scenario is still a market-friendly outcome, but the risks are building as the situation gets ever more difficult to see the endgame.”
The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records, driving a gauge of sovereign bond risk to an all-time high. Investors are betting Greece will default if it’s unable to pass the austerity measures needed to qualify for the next installment of international aid.
Greek Cabinet Shuffle
Greek Prime Minister George Papandreou was set to shuffle his Cabinet and seek to win a confidence vote today as protests over budget cuts fueled speculation the measures will be put in jeopardy.
Dutch newspaper Het Financieele Dagblad cited European Central Bank Governing Council member Nout Wellink as saying that the European Union should double the emergency fund for euro-area countries if private investors have to contribute to aid for Greece.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet tomorrow in Berlin, with pressure increasing for the two leaders to reach an accord on a rescue package for Greece. EU finance ministers agreed on June 14 to convene again on June 19 after they failed to reconcile Germany’s push for bondholders to bear some of the cost of a new plan for Greek aid with the ECB’s warning that such a measure may constitute a default.
The FTSE 100 has fallen 6.4 percent from its highest level this year on Feb. 8 as investors speculated that the pace of the global economic recovery is slowing.
Anglo American declined 1.8 percent to 2,811 pence and Lonmin sank 3.4 percent to 1,382 pence. Copper, lead, nickel and tin dropped on the London Metal Exchange.
Premier Farnell slumped 8.8 percent to 250.4 pence, the biggest drop since September 2009. Shore Capital Group Ltd. analyst Robin Speakman retained his recommendation to sell the shares, saying the results today confirmed an earnings slowdown in the first quarter.
Laird Plc (LRD) rallied 38 percent to 188.9 pence after the company said it rejected a bid which was made by Cooper Industries Plc to acquire the maker of electromagnetic shields for mobile phones for 185 pence a share in cash.
Mulberry Group Plc (MUL) surged 8.6 percent to 1,450 pence. The English luxury-fashion company said full-year profit rose more than fivefold as U.K. sales and exports surged.
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