U.K. Stocks Sink Most in Four Months; Barclays, BP Drop

U.K. stocks sank by the most in more than four months, led by banks and commodity companies, after the Federal Reserve damped expectations of more monetary stimulus and demand declined at an auction of Spanish debt.

Barclays Plc (BARC) paced a selloff in banks, dropping 5.1 percent. Rio Tinto Group and BP Plc (BP/) lost more than 2 percent as metals and crude oil declined. Next Plc (NXT) sank 4 percent after the retailer’s chief executive officer sold shares.

The benchmark FTSE 100 Index tumbled 134.57 points, or 2.3 percent, to 5,703.77 at the close in London as all 102 of the gauge’s companies fell. The measure fell 0.6 percent yesterday after U.S. factory orders missed forecasts and concern grew about the outlook for Spain’s economy. The FTSE All-Share Index slid 2.3 percent today and Ireland’s ISEQ lost 1.8 percent.

“The move that we have seen today is something of a concern because it being accompanied with heavy volumes,” Manoj Ladwa, a senior trader at ETX Capital, said in an interview with Bloomberg Television in London. “It’s largely down to the Fed’s comments. The market has had a good run on on two rounds of quantitative easing so it’s time for them to pull back.”

The volume of shares changing hands in FTSE 100-listed companies was 16 percent higher than the average over the past 30 days today, according to data compiled by Bloomberg.

Fed Policy

Minutes released yesterday from the March 13 Fed policy meeting showed the central bank planned to hold off from increasing monetary accommodation unless economic growth falters or prices rose at a rate slower than its 2 percent-target.

Stocks also fell as Spain sold 2.6 billion euros ($3.4 billion) of bonds, near the minimum target, and borrowing costs rose in its first auction since the country said public debt will surge to a record this year. The Treasury had set a range of 2.5 billion euros to 3.5 billion euros for the sale.

“Yesterday’s Fed letdown and the worrying Spanish bond auction is giving traders plenty of reason to head for the door,” said Will Hedden, a sales trader at IG Markets in London. “Events throughout the day have combined to create a somewhat perfect storm of reasons to exit the market. The first quarter seems like a distant memory this week.”

The FTSE 100 (UKX) climbed 3.5 percent in the first three months of the year, its best first-quarter rally since 2010, boosted by the European Central Bank’s 1 trillion euros in loans to the region’s financial institutions and U.S. economic data that topped estimates.

ECB Outlook

The gauge extended losses today as ECB President Mario Draghi said that the euro area’s economic outlook remains subject to “downside risks” after the central bank left its benchmark interest rate unchanged at 1 percent.

Barclays, the U.K.’s second-biggest bank, dropped 5.1 percent to 218.5 pence. Royal Bank of Scotland Group Plc (RBS), Britain’s biggest state-owned lender, slipped 2.9 percent to 26.1 pence and Lloyds Banking Group Plc (LLOY) fell 2.4 percent to 31.89 pence.

European banks fell yesterday after the yield on Spain’s 10-year bonds climbed as unemployment rose and the government said its debt will reach 79.8 percent of gross domestic product this year.

Mining companies retreated today as copper, nickel, zinc and lead declined on the London Metal Exchange. Rio Tinto dropped 3.5 percent to 3,406.5 pence, Vedanta Resources Group Plc lost 1.5 percent to 1,210 pence, Kazakhmys Plc (KAZ) slid 3.3 percent to 887 pence.

Gold Slides

Petropavlovsk Plc (POG), a miner of gold in Russia, plunged 6.5 percent to 515 pence, the lowest in almost three years, as the precious metal fell to 12-week low. Fresnillo Plc (FRES), a Mexican gold and silver producer, tumbled 8.3 percent to 1,533 pence, the largest drop this year.

BP retreated with crude oil, losing 2.6 percent to 452.05 pence. Royal Dutch Shell Group Plc slid 2 percent to 2,159 pence and BG Group Plc (BG/) sank 4.9 percent to 1,409 pence.

Oil tumbled after the Energy Department said U.S. stockpiles surged the most since 2008 as crude output climbed to the highest level in 12 years. Futures fell as much as 2.8 percent in New York trading.

Elsewhere, Next dropped 4 percent to 2,937 pence after Chief Executive Officer Simon Wolfson sold 3.8 million pounds ($6 million) worth of shares in the U.K.’s second largest retailer. Wolfson sold 125,000 shares at 3,057 pence each.

Kentz Corp. sank 7.4 percent to 437.8 pence after two directors sold 15 million shares in the Irish Oil and gas engineering company. Kerbet Ltd., which holds Kentz shares for non-executive directors Tan Sri Mohd Razali Abdul Rahman and Hassan Abas, sold the stock at 430 pence apiece.

Logica Plc (LOG) retreated 7.3 percent to 91.55 pence after the head of the company’s Benelux unit, Seamus Keating, stepped down. Analysts at Merchant Securities Group said the departure raised concerns that problems in the region are “intractable.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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

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