U.K. Stocks Retreat, Led by Barclays, BHP Billiton, Antofagasta

U.K. stocks had the biggest three-day drop since September as Greek Prime Minister George Papandreou’s call for a referendum on the European bailout raised concern that efforts to avoid a default will be derailed.

Barclays Plc (BARC) and Royal Bank of Scotland Group Plc (RBS) sank more than 8 percent. BHP Billiton Ltd. (BHP), the world’s largest mining company, and Antofagasta Plc (ANTO) fell at least 2.6 percent as Chinese manufacturing declined to the lowest level since February 2009.

The benchmark FTSE 100 Index (UKX) tumbled 122.65, or 2.2 percent, to 5,421.57 at the close in London, bringing the decline over the past three days to 5.1 percent. The gauge advanced 8.1 percent in October, the biggest monthly gain in two years, after euro-area policy makers expanded the region’s bailout fund ahead of this week’s Group of 20 summit in France. The FTSE All-Share Index lost 2.3 percent today and Ireland’s ISEQ Index slid 3.9 percent.

“Papandreou made matters a whole lot more uncertain by announcing that he would be putting the new bailout plan to a referendum of the Greek people,” said Michael Hewson, a market strategist at CMC Markets in London. “The resulting fallout could well result in a complete meltdown of the European banking system and throw Europe into turmoil.”

Papandreou’s gambit risks pushing the country into default if voters reject the financial accord and raises the ante with dissidents inside his own party. Papandreou’s popularity has plunged after austerity measures cut pensions and wages, increased taxes and sparked a wave of social unrest.

G-20 Summit

Leaders from the G-20 meet at a summit on Nov. 3-4 in Cannes, France, a week after the euro area’s authorities pledged to expand their rescue fund to 1 trillion euros ($1.4 trillion). The have already sought financial help from China and cooperation from the International Monetary Fund.

Britain’s economy grew more than forecast in the third quarter as manufacturing and services industries rebounded from disruptions during the previous three months.

Gross domestic product rose 0.5 percent from the second quarter, when it increased 0.1 percent, the Office for National Statistics said today. Economists had forecast a 0.3 percent increase, according to a Bloomberg News survey. Services output grew 0.7 percent, while industrial production rose 0.5 percent.

Barclays, Britain’s second-largest bank by assets, tumbled 9.5 percent to 176.75 pence, the biggest drop since Aug. 18. RBS lost 8.1 percent to 22.28 pence, a four-week low.

Mining Companies

BHP Billiton slid 2.7 percent to 1,915 pence as base metals fell. Rio Tinto Group retreated 3.9 percent to 3,252 pence. Antofagasta lost 4.5 percent to 1,114 pence.

A Chinese Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said. That was lower than any of 16 economist estimates in a Bloomberg News survey that had a median forecast of 51.8. A reading above 50 indicates expansion.

Bwin.Party Digital Entertainment Plc rallied 12 percent to 123.3 pence, the biggest gain since August, after the largest listed Internet gambling company agreed to form a venture with MGM Resorts International and Boyd Gaming Corp. The combined company will offer online poker to U.S. players should it become legal, they said.

888 Holdings Plc (888) climbed 6.8 percent to 35.25 pence as the online gambling company that supplies services to Caesars Entertainment Corp. reported record quarterly revenue.

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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