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U.K. Stocks Decline for Fourth Day Amid U.S. Shutdown

U.K. stocks retreated for a fourth day, the longest losing streak in almost two months, as the U.S. government shutdown entered its second day and the European Central Bank announced no new stimulus measures.

Unilever declined 1.7 percent, heading for the biggest weekly drop in three years, as UBS AG lowered its recommendation on the shares. Wolfson Microelectronics Plc (WLF) tumbled the most in more than two years after its fourth-quarter sales prediction trailed analysts’ forecasts.

The FTSE 100 Index (UKX) lost 22.51 points, or 0.4 percent, to 6,437.5 at the close in London, a one-month low. The gauge has still rallied 9.2 percent this year as the Bank of England gave forward guidance on interest rates for the first time and the Federal Reserve maintained its monthly bond purchases. The broader FTSE All-Share Index also fell 0.4 percent today, while Ireland’s ISEQ Index retreated 0.3 percent.

“Stocks on both sides of the Atlantic are deep in the red as investors worry about the implications of a protracted U.S. government shutdown,” Ishaq Siddiqi, a London-based market strategist at ETX Capital, wrote in a note. “The longer the shutdown, the more worrying it is for investors who fear that there’s potential for damage to the real economy.”

ECB President Mario Draghi refrained from signaling that any new measures are needed to boost Europe’s economic recovery. He said on Sept. 23 that another long-term refinancing operation, or LTRO, could be deployed to provide funds to Europe’s banks if needed. The central bank left its key interest rate unchanged at a record low of 0.5 percent.

Partial Shutdown

The U.S. government yesterday began its first partial shutdown in 17 years after Democrats and Republicans failed to agree on a budget. The move has placed as many as 800,000 federal employees on temporary unpaid leave, closed national parks, museums and Internal Revenue Service call centers.

Congressional leaders continued a standoff over calls to delay President Barack Obama’s health-care act, raising concern the budget dispute may affect talks to increase the debt ceiling this month to avoid a default. The U.S. has begun using the final extraordinary measures to stay within the limit, Treasury Secretary Jacob J. Lew said in a letter addressed to House Speaker John Boehner yesterday. He reiterated that such measures will be exhausted by Oct. 17.

In Italy, Prime Minister Enrico Letta won a confidence vote after Silvio Berlusconi reversed his earlier position of opposing the government as the former premier’s party showed signs of deserting him.

Unilever Downgrade

Unilever slid 1.7 percent to 2,319 pence. The world’s second-biggest consumer-goods company has retreated 5.6 percent this week, the biggest drop since August 2010, after sales growth slowed in the third quarter. UBS downgraded the shares to neutral from buy, saying the company has lost its reputation for reliability after the results.

Wolfson Microelectronics sank 16 percent to 147 pence, the biggest drop since June 2011, as the Scottish semiconductor developer forecast fourth-quarter sales of $40 million to $50 million. Analysts on average had projected $58.3 million.

Albemarle & Bond Holdings (ABM) Plc plummeted 59 percent to 28 pence, extending this week’s slide to 78 percent. The pawnbroker failed to conclude negotiations with its largest shareholder EZCorp International Inc. to raise equity of about 35 million pounds. The company said it has signed an agreement with its lenders deferring a Sept. 30 debt covenant test until Oct. 30 and delayed announcing results for the year that ended in June.

Domino’s Pizza Group Plc (DOM) climbed 3.7 percent to 610.5 pence, the biggest gain in two months, as it said U.K. same-store sales rose 4 percent in the third quarter.

“We are confident of meeting City expectations for the full year,” Chief Executive Officer Lance Batchelor said in a statement.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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