U.K. Stocks Decline, BHP, Rio Tinto Fall on Metal Drop

U.K. stocks declined as a report showed Britons experienced the biggest fall in discretionary spending power in more than a year and as the Dutch prime minister failed to reach an agreement on austerity measures with a coalition party.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, and Rio Tinto Group retreated as metals prices dropped in London and manufacturing in China contracted. Cable & Wireless Worldwide Plc (CW/) soared 12 percent after Vodafone Group Plc (VOD) agreed to acquire the company for 1.04 billion pounds ($1.7 billion) in cash.

The FTSE 100 Index (UKX) slipped 1.9 percent to 5,665.57 at the close in London. The measure rose 2.1 percent last week for the biggest gain since the week ending Feb. 3. The benchmark gauge has lost 5 percent since its 2012 high on March 16. The broader FTSE All-Share Index (ASX) fell 1.9 percent today, while Ireland’s ISEQ Index dropped 2.2 percent.

“Political developments in Europe are weighing on indices,” Rupert Osborne, a futures dealer at IG Index in London, wrote. “Some resistance in the Netherlands coalition to agree on austerity measures has added to the week’s negative start. Manufacturing data out of China is playing its part.”

Britons suffered the biggest drop in discretionary spending power in more than a year in March as income growth slowed and consumers spent more on essential items such as food and utility bills, according to Lloyds TSB.

U.K. consumers’ spending power for non-essential items after inflation fell 1.1 percent from a year earlier, the most since February 2011, the unit of Lloyds Banking Group Plc said in an e-mailed report released in London today.

Dutch Elections

Dutch Prime Minister Mark Rutte offered to quit, a move that would trigger early elections, as he sought to win parliamentary support for additional budget cuts needed to steer the Netherlands clear of the debt crisis. Queen Beatrix will consider the resignation, the government’s information service said.

In France, Socialist Francois Hollande and President Nicolas Sarkozy progressed to the final round of elections. Hollande won 28.6 percent of the vote against 27.1 percent for Sarkozy, the interior ministry said in Paris.

Euro-area services and manufacturing contracted more than estimated in April. A composite index based on a survey of purchasing managers in both industries fell to 47.4, a five- month low, from 49.1 in March, London-based Markit Economics said in an initial estimate. Economists had forecast an increase to 49.3, according to the median of 17 estimates in a Bloomberg News survey.

In China, manufacturing shrank for a sixth month in April, according to a survey of companies. Euro-area services and manufacturing contracted more than estimated in April, a report showed.

BHP, Rio Fall

BHP lost 3.6 percent to 1,898.5 pence. Rio Tinto, the third-biggest mining company, slid 4.8 percent to 3,376 pence. Copper, lead, nickel and tin were among metals falling in London.

Cable & Wireless Worldwide surged 12 percent to 35.9 pence. Vodafone, the world’s largest wireless operator, will pay 38 pence a share in an offer recommended by Cable & Wireless directors, the companies said in a statement today. The stock closed at 32 pence in London on April 20, giving it a market value of 879 million pounds.

AstraZeneca Plc (AZN) slipped 1.9 percent to 2,811.5 pence. The U.K.’s second-biggest drugmaker said it agreed to buy Ardea Biosciences Inc. for $1.26 billion.

Bumi Plc (BUMI), a London-listed mining company, sank 8.5 percent to 497.4 pence. Lenders of $437 million to PT Bakrie & Brothers asked for about $100 million in cash as additional collateral, a person familiar with the matter said. The loan is backed by Bakrie’s stake in Bumi.

Oil Discovery

Borders & Southern Petroleum Plc (BOR), U.K. explorer operating in the Falkland Islands, tumbled 32 percent to 89.5 pence, the most since at least May 2005. The stock soared 87 percent last week as investors speculated that it discovered oil. The company today said that it made a discovery at its Darwin prospect, without saying how much oil may be recoverable from the field.

Man Group Plc (EMG) lost 3.3 percent to 92.55 pence. RBC reduced its price target 24 percent to 125 pence and said it expects a 45 percent dividend cut in 2013.

SuperGroup Plc (SGP), a retailer, tumbled 4.8 percent to 335 pence, its lowest price since its initial public offering in March 2010. The stock was downgraded to “fairly valued” from “buy” at Singer Capital Markets.

Kenmare Resources Plc (KMR) lost 7.3 percent to 50.9 pence. Managing Director Michael Carvill said in the Sunday Times yesterday said he was against a takeover of the company.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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

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