U.K. Stocks Drop a Second Day Before U.S. Manufacturing

U.K. stocks fell for a second day as investors awaited a report that may show a measure of U.S. manufacturing declined last month.

Aberdeen Asset Management Plc, which agreed to buy Scottish Widows Investment Partnership in November, dropped 1.9 percent after Credit Suisse Group AG downgraded its recommendation for the stock. Fresnillo Plc (FRES) and Randgold Resources Ltd. (RRS) both slipped 2.1 percent as precious metals retreated. Lloyds Banking Group Plc (LLOY) rose 1.1 percent.

The FTSE 100 Index (UKX) lost 34.64 points, or 0.7 percent, to 6,606.96 at 12:14 p.m. in London. The equity benchmark slid 1.2 percent in November. It has still rallied 12 percent this year as central banks around the world pledged to keep interest rates low for a prolonged period to support the economic recovery. The FTSE All-Share Index fell 0.6 percent today, while Ireland’s ISEQ Index slipped 0.1 percent.

A report at 10 a.m. New York time will probably show that a measure of U.S. manufacturing fell from its highest level since April 2011 last month. The Institute for Supply Management’s index dropped to 55.1 in November, according to the median economist forecast in a Bloomberg survey. A figure greater than 50 means that activity increased.

A release from London-based Markit Economics showed that U.K. manufacturing expanded more than expected. The gauge rose to 58.4 in November from a revised 56.5 in October. The median forecast of economists had called for a reading of 56.1, according to a Bloomberg News survey.

Manufacturing Expands

Factory output in the euro area also exceeded estimates. An index based on a survey of purchasing managers rose to 51.6 last month from 51.3 in October, according to Markit. That beat the median economist forecast for a figure of 51.5.

Aberdeen Asset Management (ADN) slipped 1.9 percent to 483 pence. Credit Suisse lowered the stock to neutral, which is similar to a hold recommendation, from outperform. The brokerage said that investors have already accounted for the potential increase in earnings per share from Aberdeen’s 560 million-pound ($918 million) acquisition of SWIP on Nov. 18.

Fresnillo and Randgold Resources, which both mine precious metals, fell 2.1 percent to 815.5 pence and 2.1 percent to 4,254 pence, respectively. Gold dropped 1.2 percent to $1,238.25 per ounce, while silver decreased 1.4 percent to $19.72 an ounce.

Lloyds rose 1.1 percent to 78.3 pence. Sky News yesterday reported that Chancellor George Osborne will reaffirm his intention to reduce the state’s holding in the company. The government cannot offload any further Lloyds shares until Dec. 19 under the terms of an agreement struck when it sold a 6 percent stake in the bank in September, Sky News said.

Talvivaara Mining Co. jumped 19 percent to 5.5 pence. The shares have more than doubled over the last four days, their largest such rally since the company listed in London in May 2007. A district court in Espoo, Finland, where the nickel miner is based, said on Nov. 29 that it decided to begin the restructuring of the business. Talvivaara filed for a corporate reorganization on Nov. 15 to raise funds and avoid bankruptcy.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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