U.K. stocks fell, trimming the FTSE 100 (UKX) Index’s third week of gains, after Federal Reserve Bank of St. Louis President James Bullard said a “small taper” in U.S. stimulus is possible next month.
Randgold Resources Ltd. (RRS), Fresnillo Plc (FRES) and Polymetal International Plc lost at least 3 percent as gold fell. Tate & Lyle Plc (TATE) retreated 2.2 percent after Credit Suisse Group AG downgraded the stock. Direct Line Insurance Group Plc (DLG) sank 3.7 percent after Royal Bank of Scotland Group Plc (RBS) sold a stake. Foxtons Group Plc (FOXT) jumped 16 percent on its first day of trading.
The FTSE 100 slipped 28.96 points, or 0.4 percent, to 6,596.43 at the close in London, paring this week’s gain to 0.2 percent. The benchmark gauge rose to the highest level since Aug. 2 yesterday after the Fed decided against reducing the size of its monthly bond purchases. The FTSE All-Share Index dropped 0.5 percent today, and Ireland’s ISEQ Index fell 0.6 percent.
“After reasonably strong U.S. data yesterday, forecasters are becoming firmer in their conviction that tapering will start this year after all,” said Guy Foster, a London-based portfolio strategist at Brewin Dolphin Ltd., which manages 28 billion pounds ($45 billion).
Reports released yesterday showed sales of previously-owned U.S. houses unexpectedly rose in August to the highest level in more than six years, while fewer-than-forecast Americans filed claims for jobless benefits.
The Fed’s call to maintain the pace of purchases this month “was a borderline decision,” Bullard said on Bloomberg Television’s “Bloomberg Surveillance” with Tom Keene today. “It’s possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October.”
Germany holds elections on Sunday. Support for the opposition Social Democrats rose 1 percentage point to 28 percent, 10 points behind Chancellor Angela Merkel’s Christian Democratic-led bloc, an INSA poll published yesterday showed. Both main parties fell short of a majority with their preferred coalition partners.
“There is a highly uncertain German coalition outcome coming up with elections this weekend,” said Foster. “Nobody wants to take a big position ahead of that.”
The volume of shares changing hands in FTSE 100-listed companies was 91 percent higher than the 30-day average, data compiled by Bloomberg show.
Randgold, a producer of the metal in Africa, declined 3.4 percent to 4,676 pence and Polymetal sank 5.2 percent to 669 pence. Gold fell, after posting the biggest two-day gain since July. Silver prices also dropped for the first time in three days. Fresnillo, which produces gold and silver in Mexico, lost 3.4 percent to 1,033 pence.
Tate & Lyle, which makes low-calorie sweetener Splenda, slid 2.2 percent to 766.5 pence. Credit Suisse downgraded the shares to neutral from outperform, similar to a buy rating, saying the price of sweeteners may fall as sugar drops in Europe.
Direct Line dropped 3.7 percent to 210 pence as RBS sold a 630 million-pound stake in the U.K.’s biggest home and car insurer at that price.
Standard Chartered Plc (STAN), a lender that earned 9.8 percent of its pretax profit from India last year, declined 1.8 percent to 1,535.5 pence as the country’s central bank unexpectedly raised the benchmark interest rate. All 36 analysts in a Bloomberg survey had predicted no change.
Foxtons surged 16 percent to 267 pence, giving the real-estate broker a market value of 753.4 million pounds. The London-based company and its investors raised 390 million pounds in an initial public offering, as they sold 169.4 million shares at 230 pence each.
J Sainsbury Plc (SBRY) added 1.4 percent to 396.4 pence. Citigroup Inc. raised its recommendation on the shares to neutral from sell before the U.K.’s third-biggest supermarket chain reports earnings on Oct. 2. The brokerage forecast Sainsbury will post comparable sales growth of 2.8 percent in the second quarter, up from 0.8 percent in the previous quarter.
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