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U.K. Stocks Slide as U.S. Consumer Spending Unexpectedly Falls

U.K. stocks declined for a third day after U.S. consumer spending unexpectedly dropped for the first time in almost two years, deepening concern that growth in the world’s largest economy is stalling.

Xstrata Plc (XTA) slid 3.6 percent, leading a retreat by mining companies, after posting earnings that missed analysts’ estimates. Hargreaves Lansdown Plc (HL/) led the FTSE 100 Index (UKX) lower, losing 13 percent.

The FTSE 100 fell 56.04, or 1 percent, to 5,718.39 at the 4:30 p.m. close in London, its lowest level in five weeks. The benchmark measure has slumped 6.1 percent since its peak this year on Feb. 8 amid concern that growth in the U.S. and Europe will slow. The FTSE All-Share Index dropped 1.1 percent today, while Ireland’s ISEQ Index retreated 1.7 percent.

Data coming out of the U.S. “shows how fragile sentiment is,” said David Jones, chief market strategist at IG Index in London. “People feel very nervous at the moment.”

The House of Representatives approved legislation yesterday to increase the U.S. debt limit by $2.1 trillion and cut federal spending by $2.4 trillion. The Senate will vote on the deal later today.

The U.S. deficit deal will add to a reduction in growth next year of 1.5 percentage points coming from the expiration of past stimulus programs, according to economists at JPMorgan Chase & Co. and Deutsche Bank AG.

U.S. Personal Spending

Consumer spending in the U.S. fell 0.2 percent in June as a slump in hiring caused households to retrench, Commerce Department figures showed today. The median estimate of 77 economists surveyed by Bloomberg News had called for a 0.1 percent increase.

Xstrata sank 3.6 percent to 1,235.5 pence after posting first-half earnings before interest, taxes, depreciation and amortization that increased 30 percent to $5.82 billion. That missed the average analyst estimate of $5.93 billion.

Rio Tinto Group, the world’s second-largest mining company, fell 2.5 percent to 4,176 pence. BHP Billiton Ltd. (BHP), the biggest, dropped 1.9 percent to 2,214.5 pence.

Hargreaves Lansdown, Britain’s largest retail broker, slumped 13 percent to 506.5 pence, its biggest drop since its initial public offering in 2007. The U.K.’s Financial Services Authority published rules yesterday requiring independent financial advisers to disclose fees they receive for directing clients into certain funds. The rules come into force from the end of next year. The proposals won’t have a material effect on Hargreaves’s business, the Bristol-based company said in a statement today.

Centamin, Fresnillo

Centamin Egypt Ltd. (CEY) tumbled 20 percent to 109.6 pence, the gold producer’s biggest decline since its initial public offering in 2001, after cutting its projected output.

Fresnillo Plc (FRES), the world’s largest primary silver producer, jumped 4.6 percent to 1,813 pence after reporting first-half net income of $553.2 million, more than double the $258.9 million it posted a year earlier.

BP Plc (BP/), Europe’s second biggest oil company, dropped 2.4 percent to 447.1 pence as crude declined for a third day in New York, its longest losing streak since May.

Amlin Plc (AML) plunged 16 percent to 335 pence, the Lloyd’s of London insurer’s biggest drop since September 2001, after saying that its first-half profit may miss analysts’ estimates.

Northumbrian Water

Northumbrian Water Group Plc (NWG) led a rally of U.K. water utilities, jumping 4.5 percent to 469.5 pence after a group led by Cheung Kong Infrastructure Holdings Ltd. agreed to buy the Durham-based company for 2.4 billion pounds ($3.9 billion).

Severn Trent Plc climbed 2.5 percent to 1,451 pence, while United Utilities Group Plc (UU/) rose 1.1 percent to 591 pence.

National Grid Plc (NG/), operator of the U.K.’s power and gas networks, gained 2 percent to 602.5 pence after Ofgem, the U.K. energy regulator, said it will extend the energy transmission price control regime for one year until March 2013.

Rotork Plc (ROR), the world’s largest maker of valve actuators used in oil pipelines, surged 8.1 percent to 1,695 pence, its biggest jump since March 2009. The company predicted that full- year sales will be “materially ahead” of previous forecasts.

Moneysupermarket.com Group Plc (MONY), whose Web sites allow users to compare prices of financial products, soared 7.6 percent to 120.4 pence after reporting first-half net income of 8.8 million pounds, compared with 1.9 million pounds for the same period a year earlier.

To contact the reporter on this story: Ben Edwards in London at bedwards35@bloomberg.net

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

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