U.K. Stocks Drop; FTSE 100 Retreats From Five-Year High

U.K. stocks declined from their highest level since December 2007, paring the fifth week of gains for the FTSE 100 Index (UKX), as European leaders met in Brussels for a second day.

Bwin.Party Digital Entertainment Plc (BPTY) dropped the most in almost three months after the gambling company said 2013 revenue will trail current estimates. Rentokil Initial Plc (RTO) rose the most in three years after the world’s largest pest-control company said adjusted pretax profit jumped 16 percent in the fourth quarter.

The FTSE 100 Index lost 39.76 points, or 0.6 percent, to 6,489.65 at the close of trading in London. The gauge yesterday rallied to a five-year high as U.S. economic data beat estimates and amid optimism that central banks around the world will continue stimulus measures. The broader FTSE All-Share Index fell 0.5 percent today, while Ireland’s ISEQ Index dropped 0.3 percent.

“It’s not unusual to see a bit of profit taking at the end of the week after some strong days in the market,” Veronika Pechlaner, who helps manage about $1.5 billion at Jersey, Channel Islands-based Ashburton Ltd., said in a phone interview. “We would see any pullback in the market as a buying opportunity. The big question is if all this positive macro data out of the U.S. at the moment will stay that way in the second quarter when tax hikes and spending cuts from earlier in the year are felt in the market.”

The volume of shares changing hands in companies on the FTSE 100 was 47 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.

Brussels Summit

European Union leaders, meeting for a second day in Brussels today, may endorse plans for loosening austerity measures and giving debt-ridden countries more time to bring down deficits.

Italian legislators failed to select speakers for the country’s two houses of parliament today in a sign of the growing political gridlock in the EU’s fourth-largest economy. They met for the first time since elections last month meant no candidate won the majority in both houses required of an Italian government. The parliament will hold a second ballot today.

In the U.S., Britain’s biggest trading partner, industrial production increased 0.7 percent in February after being unchanged the previous month, figures from the Federal Reserve showed in Washington. The median estimate of economists surveyed by Bloomberg called for a 0.4 percent gain.

Other data showed manufacturing in the New York area expanded at a slower pace than economists predicted in March. The Federal Reserve Bank of New York’s general economic index eased to 9.2 this month from 10 in February, which was the highest since May. Readings above zero signal expansion.

Pound Weakness

In the U.K., policy makers aren’t trying to talk down the pound, Bank of England Governor Mervyn King said in an interview with ITV News yesterday.

In its Quarterly Bulletin published yesterday, the BOE noted that there had been a large drop in the pound in recent months, which it said may have been partly related to a weaker demand for currencies traditionally considered havens.

“There’s clearly a divergence between the FTSE 100 and the U.K. economy,” James Butterfill, head of global equity strategy at Coutts & Co in London, told Francine Lacqua on Bloomberg Television. His firm oversees $64 billion. “A weaker pound hurts the consumer, but you see that 27 percent of the FTSE’s revenue comes from growth markets and so it really benefits from a weak sterling,” Butterfill said.

Bwin.Party dropped 4.4 percent to 144.90 pence. Revenue will be “slightly lower” in 2013 than analysts currently predict, the online betting company said in a statement.

Carnival Outlook

Carnival Corp. slipped 2.1 percent to 2,379 pence in London, its lowest price this year. The world’s largest cruise- line operator cut its earnings forecast for 2013 to between $1.80 and $2.10 a share, from a previous forecast for as much as $2.40 a share. The stock fell every session this week for the biggest streak of declines in almost eight months.

G4S Plc (GFS), the world’s largest security company, fell 1.5 percent to 298.3 pence. Bank of America Corp. cut its rating on the stock to underperform, similar to a sell recommendation, from neutral, with analysts led by Andrew C. Ripper citing the shares’ recent rally. G4S has increased 21 percent since the end of November.

Rentokil rallied 9.4 percent to 99 pence, the biggest jump since February 2010. Revenue increased 2.8 percent at constant exchange rates in 2012, the company said in a statement. Chief Executive Officer Alan Brown said he expects Rentokil will sustain the growth seen in the fourth quarter throughout 2013.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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