U.K. Stocks Decline as Ophir Energy Retreats
U.K. stocks declined, following a two-day rally, on deepening concern that the economic slowdown in China will worsen.
Ophir Energy Plc (OPHR) tumbled 5.2 percent after newspapers reported that the board of Tanzania Petroleum Development Corp. has to review its agreements with foreign energy companies. Aquarius Platinum Ltd. (AQP) surged 8.6 percent after saying mining resumed at its Kroondal facility.
The FTSE 100 Index (UKX) retreated 0.4 percent to 5,893.52 at the close in London. The equity benchmark has still rallied 12 percent from this year’s low on June 1 as European Central Bank President Mario Draghi pledged to do everything to protect the euro. The broader FTSE All-Share Index also slipped 0.4 percent today, while Ireland’s ISEQ Index lost 0.6 percent.
U.K. stocks jumped last week as the Federal Reserve committed itself to buy bonds until the U.S. unemployment rate drops and Germany’s highest constitutional court permitted the government to approve the euro area’s permanent bailout fund.
“The rally is being supported purely by central bank intervention, making it completely unsustainable,” Craig Erlam, a market analyst at Alpari Research in London, wrote in a note. “This week is likely to be much quieter, so we could see stocks continue to make small losses.”
Citigroup Inc. cut its growth forecast for the Chinese economy to 7.6 percent in 2013 from 8 percent because of weakening external demand. Separately, the official Xinhua News Agency cited Lu Zhengwei, chief economist at Industrial Bank Co., as saying that China must exercise caution with its monetary policy. Zhengwei said the Fed’s third round of quantitative easing increases pressure to control inflation.
Ophir Energy, an oil and gas explorer, tumbled 5.2 percent to 608 pence. Minister of Energy and Mines Sospeter Muhongo ordered the board of Tanzania Petroleum to review all of its agreements with energy companies, Tanzania’s Daily News and the Guardian on Sunday reported.
In a statement, Ophir said it “is fully compliant from an operational and regulatory perspective in all of its Tanzanian licenses. Ophir welcomes the review process and, with the recommencement of drilling in early October, looks forward to another high-impact drilling program.”
Aquarius Platinum, a platinum producer in South Africa, surged 8.6 percent to 53 pence. The company said mining resumed this morning at its Kroondal facility. Aquarius suspended production on Sept. 14 following protests.
BT Group Plc (BT/A) slid 2.1 percent to 228.2 pence. Exane BNP Paribas cut its recommendation on the shares to neutral from outperform. The brokerage said that the U.K.’s largest fixed- line phone provider will need 3.7 million customers to pay 10 pounds a month to cover the 280 million-pound ($455 million) charge for televising football plus production costs.
Imagination Technologies Group Plc (IMG) lost 3.6 percent to 568.5 pence. UBS cut the shares to sell from neutral.
Petropavlovsk Plc (POG) increased 3.1 percent to 447.4 pence after Citigroup Inc. raised the gold mining company to buy from neutral. The Fed’s quantitative-easing program will probably support gold and silver prices, the analysts wrote in a note.
Unilever Plc (ULVR) added 1 percent to 2,268 pence. UBS AG raised its recommendation on the maker of Bertolli olive oil to buy from neutral. The company’s portfolio may become more focused, increasing growth in food sales to 5 percent a year by 2015, analysts wrote in a report.
The volume of shares changing hands on the FTSE 100 was 2.7 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
To contact the reporter on this story: Adria Cimino in Paris at firstname.lastname@example.org
To contact the editor responsible for this story: Andrew Rummer at email@example.com
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.