U.K. Stocks Fall on Concern Contagion Will Spread; RBS Retreats

U.K. stocks dropped for a second day as concern mounted that the euro area’s sovereign-debt crisis will spread to Italy.

British Sky Broadcasting Plc plunged 4.6 percent after the opposition Labour party said it will force a vote to delay News Corp.’s bid for the satellite broadcaster. Barclays Plc (BARC), Lloyds Banking Group Plc (LLOY) and Royal Bank of Scotland Group Plc (RBS) led the FTSE 100 lower, all declining more than 3 percent. International Power Plc (IPR) gained 2.6 percent.

The FTSE 100 fell 1 percent to 5,929.16 at the 4:30 p.m. close in London. The gauge dropped the most in two weeks on July 8 as a U.S. jobs report showed that the world’s largest economy added fewer jobs in June than economists had predicted. The FTSE All-Share Index (ASX) declined 1.1 percent today, while Ireland’s ISEQ Index retreated 1 percent.

“Contagion risk towards the third-biggest economy in Europe is definitely on people’s radars now, undoubtedly, and that’s probably what’s changed over the last three days,” said Graham Bishop, European equity strategist at RBS.

Yields on Italy’s benchmark 10-year bonds increased for a sixth day, jumping 41 basis points to 5.685 percent in London. Greece, Ireland and Portugal all had to ask for international assistance from the European Union after their 10-year yields rose above 7 percent.

BSkyB, Trinity Mirror

BSkyB slumped 4.6 percent to 715.5 pence, extending last week’s 12 percent retreat, as the shares neared News Corp.’s 700-pence-a-share offer for the U.K.’s biggest listed broadcaster. The Culture Secretary, Jeremy Hunt, referred the bid to the Competition Commission “with immediate effect.” News Corp. withdrew its pledge to spinoff its Sky News channel as part of its offer for BSkyB.

Panmure Gordon & Co. said they there is now only a 10 percent chance of News Corp. completing its acquisition of BSkyB. Analyst Alex De Groote said “we believe the deal is all but dead.”

Trinity Mirror Plc (TNI) retreated 8 percent to 46 pence after last week rallying 18 percent on speculation that the publisher of the Sunday Mirror would gain advertising revenue from News Corp.’s News of the World Sunday tabloid. News Corp. published the final edition of the newspaper on July 10.

Barclays sank 3.8 percent to 234 pence, Lloyds declined 3.7 percent to 44.8 pence and RBS slipped 4 percent to 35.7 pence. The spreads that investors demand to hold Italian, Portuguese and Spanish debt over bunds widened to euro-era records.

International Power advances

International Power, the U.K. utility controlled by GDF Suez SA with a 69.8 percent stake, jumped 2.6 percent to 309.1 pence after saying that a new carbon tax in Australia would not have a material impact on the company’s results.

Northumbrian Water Group Plc (NWG) gained 5 percent to 447.7 pence after saying that Cheung Kong Infrastructure Holdings Ltd. made a non-binding 465 pence-per-share offer, valuing the utility at 2.4 billion pounds ($3.8 billion). Li Ka-Shing, Hong Kong’s richest man, controls CKI.

Laird Plc (LRD), the biggest maker of mobile-phone electronic shields, tumbled 6.9 percent to 190 pence after Cooper Industries Plc, a U.S.-based electrical-distribution equipment, said it’s reviewing its interest in the company. Cooper said on June 16 that it may make a 185 pence-per-share offer. The U.S. company has until Aug. 1 to announce a firm intention to bid or say it won’t.

Yell Group Plc (YELL), the publisher of the Yellow Pages telephone directory in the U.K., surged 9.2 percent to 9.5 pence after announcing that it agreed to purchase Znode, a privately owned e-commerce software provider.

To contact the reporter on this story: Conor Sullivan in London at csullivan39@bloomberg.net

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

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