U.K. Stocks Drop as Mining Companies, Severn Trent Fall

U.K. stocks retreated, extending three consecutive weeks of declines for the benchmark FTSE 100 Index, as mining companies fell after Chinese export growth sank to a 10-month low.

Anglo American Plc (AAL), Rio Tinto Group and Vedanta Resources Plc all lost more than 2 percent as copper fell to a five-week low. Severn Trent Plc dropped 6 percent after a consortium of investors abandoned its bid for the water utility. ITV Plc paced advancing shares as Liberum Capital recommended the TV broadcaster.

The FTSE 100 slipped 11.54 points, or 0.2 percent, to 6,400.45 at the close in London, after swinging between gains and losses at least eight times. The gauge has slid for three consecutive weeks amid concern the U.S. Federal Reserve will start to taper its bond-buying program that helped send the measure to its highest level since 1999.

“Markets have become much more volatile, it doesn’t really matter which asset class you look at,” said Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc in London. “The focus is very much on the macro story right now. The global growth story is by in large in tact, but investors are in slight derisk mode.”

The broader FTSE All-Share Index lost 0.1 percent today, while Ireland’s ISEQ Index slid 0.4 percent. The volume of shares changing hands in companies listed on the FTSE 100 (UKX) was 16 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.

Mining Companies

A gauge of U.K. mining companies retreated 1.7 percent and copper led a selloff in base metals after a report showed China’s export growth plummeted in May and imports unexpectedly fell as a crackdown on fake trade invoices exposed weakness in global demand.

Anglo American slid 2.8 percent to 1,421.5 pence, Rio Tinto Group dropped 2.4 percent to 2,740 pence and Vedanta Resources declined 2.3 percent to 1,212 pence.

Severn Trent lost 6 percent to 1,946 pence after Borealis Infrastructure Management Inc. and its partners in the LongRiver group said they will abandon a 5.3 billion-pound takeover offer after the U.K. water utility declined to negotiate with the group. Severn Trent (SVT) rejected the group’s bid of 2,200 pence a share on June 7.

Britvic Plc (BVIC) fell 1.7 percent to 500.5 pence after Morgan Stanley placed 8.8 million shares in the maker of Robinsons fruit drinks via accelerated bookbuilding, according to terms obtained by Bloomberg News. The shares were offered at 495 pence to 505 pence apiece.

Electronics Distributors

Electrocomponents Plc (ECM) declined 1.7 percent to 258.3 pence and Premier Farnell Plc fell 2.2 percent to 204.9 percent after Credit Suisse Group AG downgraded the electronics distributors to neutral from outperform, saying the near-term outlook for the companies has moderated and a recovery in growth recovery may be slower than expected.

Mulberry Group Plc tumbled 8.2 percent to 980 pence after the company said its creative director Emma Hill wants to leave the British luxury-goods maker after six years.

ITV (ITV) climbed 3.7 percent to 134.2 pence after Liberum reiterated its buy recommendation and raised its price estimate for the broadcaster’s shares by 29 percent to 200 pence. The brokerage also increased its earnings estimates for 2014 and 2015, saying analysts’ forecasts are too low.

Kingfisher Plc (KGF) advanced 1.8 percent to 352.9 pence as Chief Executive Officer Ian Cheshire named two of his deputies as potential candidates to succeed him when he relinquishes leadership of the largest U.K. home-improvement retailer in as little as three years.

Punch Taverns

Punch Taverns Plc (PUB) increased 3.9 percent to 13.25 pence after the company said its on track to meet full-year profit estimates. The pub owner also revised its restructuring plan. The new proposal includes reducing debt-service payments by 600 million pounds ($932 million) over five years and not going in for refinancing until 2029.

Balfour Beatty Plc (BBY) gained 4.8 percent to 226.3 pence after the U.K.’s largest construction company said it will close three sites. This will include shutting down its operations in Dartford, England, because of insufficient activity and a high cost base.

Xaar Plc jumped 26 percent to 807 pence, for the biggest advance on the FTSE All-Share gauge. The manufacturer of ink-jet printing technology forecast 2013 revenue growth of 50 percent and said it sees “very strong” operating-profit margin for the year.

In Dublin, Elan Corp. rallied 1.6 percent to 10.13 euros after its board of directors unanimously rejected a higher takeover offer from Royalty Pharma. The Irish drugmaker hired Citigroup Inc. to assess several “unsolicited corporate enquiries.” Royalty Pharma, an investor in intellectual-property revenue streams from medicines, last week raised its offer to buy Elan by 5 percent to $6.7 billion.

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.