U.K. Stocks Drop on U.S. Housing Data; ICAP Declines

U.K. stocks fell, even as the FTSE 100 Index (UKX) headed for its longest streak of monthly gains since 1997, as Italian bond yields rose after the Mediterranean country sold debt and U.S. data showed pending house sales dropped in February.

ICAP Plc (IAP) declined the most in more than four months after the world’s largest broker of transactions between banks said profit will slip this year. TUI Travel Plc (TT/) rose 4 percent after forecasting that its operating profit will grow at the top of its projections in 2013.

The FTSE 100 Index lost 11.81 points, or 0.2 percent, to 6,387.56 at the close of trading in London. The benchmark gauge has still rallied 8.3 percent so far this year as U.S. lawmakers agreed on a compromise budget and U.S. jobs and housing data beat forecasts. The broader FTSE All-Share Index slid 0.3 percent today, while Ireland’s ISEQ Index retreated 0.3 percent.

“We’re neutral on Europe. We haven’t taken any positions against Europe but the growth story is just not there at the moment,” Axel Weber, chairman at UBS AG in Zurich, told Francine Lacqua on Bloomberg Television. “Structural problems are unresolved and that’s not going to bode well for equities.”

Prudential Plc (PRU), Schroders Plc, and British Land Co. Plc trade without the right to their latest dividend today, wiping out more than 3 points from the FTSE 100, data compiled by Bloomberg show. The volume of shares trading hands in FTSE 100- listed companies was 5.4 percent more than the average of the past 30 days, data showed.

Italy Debt Auction

Italy’s 10-year sovereign-bond yields rose 19 basis points to 4.76 percent, while rates on five-year notes increased 22 basis points to 3.56 percent. The country sold debt due in 2018 and 2023, with the five-year bond auction seeing its lowest bid- to-cover ratio since 2002, according to data compiled by Bloomberg.

In the U.S., contracts to purchase previously owned houses slipped 0.4 percent in February, more than the 0.3 drop forecast by economists in a Bloomberg survey. That follows a revised 3.8 percent increase in January, which was the fastest pace since May.

The U.K. economy shrank 0.3 percent in the fourth quarter last year from the previous period, final figures from the Office for National Statistics showed today. That’s the fourth contraction in five quarters.

Bank Capital

U.K. lenders must raise at least 25 billion pounds ($38 billion) to make up a shortfall in capital to cover higher estimates for expected loan losses, potential fines and better risk calculations, the Bank of England said.

The shortfall follows an examination by the Financial Services Authority into banks’ exposure to commercial real estate and euro-area economies, risk models and provisions for compensation and fines over a three-year period.

ICAP plunged 6.3 percent to 302.3 pence, its lowest price since Dec. 12, after predicting full-year profit will decline about 21 percent this year. Pretax profit will be about 280 million pounds, the low end of a range the company gave a month ago, ICAP said in a statement.

Prudential declined 2.4 percent to 1,051 pence, excluding the impact of the loss of dividend rights. The U.K. finance regulator fined the country’s biggest insurer 30 million pounds, and censured Chief Executive Officer Tidjane Thiam for not telling it soon enough that it planned to acquire American International Group Inc.’s Asian subsidiary.

Vodafone Group Plc (VOD), the second-largest stock on the FTSE 100 by weight, lost 0.9 percent to 186 pence. A gauge of telecommunication companies was among the worst performers of the 19 industry groups on the Stoxx 600.

Centamin Plc declined 4.6 percent to 53.65 pence after the miner of gold in Egypt reported earnings that fell short of analyst predictions. The stock has still gained 37 percent so far this year, compared with an 11 percent drop for an index of European mining stocks.

TUI Travel climbed 4 percent to 322.8 pence, its biggest increase in five weeks. The holiday operator said operating profit will probably rise this year near the top of the 7 percent to 10 percent range it earlier projected.

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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