U.K. stocks declined, led by a selloff in utilities and energy companies, as investors awaited more debt auctions by euro-area nations.
SSE Plc, the U.K.’s second-largest power producer, dropped more than 3 percent after Electricite de France SA cut gas prices at its British unit. Royal Dutch Shell Group Plc retreated with crude oil. Unilever Plc (ULVR) tumbled 3.2 percent after Bank of America Corp. downgraded the shares.
The benchmark FTSE 100 lost 0.5 percent to 5,670.82 at the close in London, paring yesterday’s 1.5 percent advance that was the biggest in a week. The broader All-Share Index slid 0.4 percent today. Ireland’s ISEQ Index fell 1.1 percent in Dublin.
“Selling pressure has begun to form at the top of the trading range,” said Will Hedden, a sales trader at IG Index in London. “With important euro-zone bond auctions tomorrow from Spain and Italy, it is unsurprising to see markets inch around nervously.”
Stocks fell across Europe today after David Riley, head of the sovereign-debt unit at Fitch Ratings, said the region’s central bank should increase its purchases of government bonds to ease pressure on yields.
“We need to have a credible buyer put in place and we don’t have that at the moment,” which is “why we have a number of sovereigns under review,” Riley said in Frankfurt. “The ECB needs to be more actively engaged, but it can’t save the euro on its own. The crisis won’t be over until we have broad-based economic recovery.”
Euro-Area Debt Sale
Germany today received bids for 8.97 billion euros ($11 billion) of five-year notes at an auction, more than double the maximum target. Spain and Italy are due to sell as much as 17 billion euros in debt tomorrow.
Mining companies led a rally in the FTSE 100 yesterday after Alcoa Inc. kicked off the U.S. earnings season with results that matched analysts’ estimates. The gauge lost 5.6 percent last year as European leaders struggled to contain the sovereign-debt crisis and assure the euro’s survival.
SSE, the U.K.’s second-largest power producer, dropped 2.8 percent to 1,264 pence after EDF Energy said it will cut gas prices in the U.K. by 5 percent from Feb. 7 following a drop in the wholesale cost of the fuel.
Centrica Plc (CNA), the owner of British Gas, slid 1.3 percent to 283.8 pence.
EDF is the first utility in the U.K to trim prices following an October call from the Office of Gas & Electricity Markets for “radical” changes in the market. Centrica, SSE, EON AG, RWE AG and Iberdrola SA, which owns ScottishPower, also supply electricity in the British market.
Shell led declines in energy companies as crude oil fell in New York. Europe’s largest oil company retreated 3.1 percent to 2,327.5 pence, while BP Plc (BP/), the region’s second-biggest producer, slipped 0.9 percent to 475.3 pence and BG Group Plc (BG/) lost 2 percent to 1,448 pence.
Unilever dropped 3.1 percent to 2,084 pence after Bank of America lowered its recommendation for the shares to “underperform” from “neutral,” saying 2012 results will hit the low end of targets.
J Sainsbury Plc (SBRY) slid 1.2 percent to 302.1 pence, falling for the first time in four days. The shares slipped even as the U.K.’s third-largest supermarket owner today reported third- quarter sales growth that beat analysts’ estimates.
Rival Tesco Plc (TSCO), which will announce earnings tomorrow, decreased 1.3 percent to 385 pence, falling for a sixth consecutive day.
RBS Job Cuts
Royal Bank of Scotland Group Plc (RBS) paced advancing shares, climbing 3.1 percent to 21.79 pence. The U.K. lender’s Irish unit is preparing its second round of job cuts in four years as part of an effort to save about 50 million euros, according to two people with knowledge of the plan.
RBS will tomorrow announce a plan resulting in the loss of as many as 5,000 investment-banking jobs, according to two people familiar with the matter.
Lloyds Banking Group Plc (LLOY) rose 3.2 percent to 28.17 pence.
Aviva Plc (AV/) advanced 2.7 percent to 315.3 pence after the Guardian and the Independent reported that China’s Ping An Insurance (Group) Co. may be considering a bid for the U.K. insurer. The Guardian reported a price of about 500 pence a share, citing unidentified traders.
Capita Plc (CPI) gained 1.5 percent to 658.5 pence after Citigroup Inc. raised its recommendation for the shares to “buy” from “neutral.”
Rentokil Initial Plc (RTO) rallied 5.7 percent to 70.4 pence after RBC Capital Markets upgraded the company to “top pick” from “outperform.”
Michael Page International Plc (MPI) jumped 6.6 percent to 368 pence after a conference call, in which company executives reassured analysts about the earnings outlook for the recruiter, said Oriel Securities Ltd.’s Hector Forsythe. There was an “air of reassurance from management,” Forsythe said in a telephone interview.
The company also reported an 18 percent increase in full- year pretax profit to 85 million pounds ($130 million), short of analysts’ median estimate of 88.95 million pounds.
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