U.K.’s FTSE 100 Index Drops on Euro-Area Manufacturing

U.K. stocks fell for a fifth day, for the longest run of losses in 10 months, after a contraction in euro-area manufacturing added to signs that Britain’s largest trading partner is struggling to emerge from a recession.

Eurasian Natural Resources Corp., CRH Plc (CRH) and Smith Groups Plc paced the selloff, each falling at least 2 percent in London trading. Next (NXT) Plc rallied to the highest price in at least 24 years after the clothing retailer reported profit that topped analyst estimates.

The benchmark FTSE 100 Index (UKX) lost 44.15 points, or 0.7 percent, to 6,388.55 at the close in London as all but 24 stocks fell. The gauge has slid 2.2 percent since this year’s high on March 14, its the highest level since December 2007, after euro area ministers proposed an unprecedented levy on Cyprus bank deposits to help pay for the island nation’s rescue package.

“Downside risks have started to materialize and another leg of recession might be the baseline scenario in early 2013,” Annalisa Piazza, an analyst at Newedge Strategy in London wrote in an e-mail. “The Italian political situation and the turmoil related to the Cyprus bailout have certainly weighed on confidence as companies struggle to see the light at the end of the tunnel.”

The broader FTSE All-Share Index lost 0.6 percent today. Ireland’s ISEQ Index dropped 0.9 percent after rallying to its highest level in 4 1/2 years in Dublin yesterday.

Euro-Area Industry

Stocks retreated as euro-area services and manufacturing output shrank contracted. A composite index based on a survey of purchasing managers in both industries fell to 46.5 this month from 47.9 in February, London-based Markit Economics said. Economists had forecast a reading of 48.2, according to a Bloomberg survey. A reading below 50 indicates contraction.

In Cyprus, the European Central Bank said it will withdraw Cypriot banks’ access to emergency funds on March 26 if the government failed to agree to a bailout from the European Union and the International Monetary Fund. Russia has also rebuffed Cyprus’s request for a bailout loan as the euro-area nation sought to salvage talks in Moscow.

The volume of shares changing hands in FTSE 100 companies was 10 percent lower than its 30-day average, according to data compiled by Bloomberg.

ENRC Loss

ENRC (ENRC) fell 4.1 percent to 294.3 pence, the lowest price this year. The London-listed metals and power company yesterday posted an unexpected full-year loss and said it is in talks with its five main owners on selling new shares to expand its free float and raise cash.

CRH, the world’s second-largest maker of construction materials, slid 2.3 percent to 1,493 pence today, while Smiths Group, which yesterday predicted tough trading conditions in the second half, dropped 2.7 percent to 1,284 pence today.

Next climbed 4 percent to 4,314 pence, its highest price since at least 1988. The U.K.’s second-largest clothing retailer posted a 9 percent increase in underlying pretax profit to 621.6 million pounds ($940 million). That topped the average analyst estimate of 620.3 million pounds.

Travis Perkins Plc (TPK) rose 2.4 percent to 1,443 pence, reaching its highest price since August 2007 and extending yesterday’s 2 percent rally, after U.K. Chancellor of the Exchequer George Osborne pledged 3.5 billion pounds to help buyers of new homes. Analysts including those at Dublin-based Goodbody Stockbrokers today said the builders merchant may profit most from the government initiatives.

SIG, Grafton

SIG Plc (SHI), which distributes specialty building products, advanced 3.1 percent to 162.5 pence, while Ireland’s Grafton Group Plc (GN5) increased 2.8 percent to 4.98 euros in Dublin.

United Utilities Group Plc climbed 1.9 percent to 709 pence. The U.K.’s largest publicly traded water company said investments including infrastructure upgrades for the year ending March rose 10 percent to 750 million pounds.

Lamprell Plc (LAM) rallied 2.7 percent to 145 pence after the engineering company’s Chief Executive Officer James Moffat said he sees 2013 as a “recovery” and “break-even” year.

“We see a good pipeline of business between new rig builds and rig repairs,” he said in an interview. “We have a sound platform looking forward.” The company posted a 2012 loss of $110.5 million.

Premier Farnell Plc (PFL) gained 2.7 percent to 224.7 pence after the company reported full-year results that met analyst estimates and said the new financial year had started positively.

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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