U.K. stocks were little changed, with the FTSE 100 Index (UKX) heading for the longest streak of weekly losses since July 2008, as investors weighed the timing of any reduction in monetary stimulus from the Federal Reserve.
RSA Insurance Group Plc (RSA) plunged to an eight-year low after Chief Executive Officer Simon Lee resigned and the company said higher reserves related to an investigation at the Irish unit will reduce 2013 earnings. Hays Plc (HAS) gained 2.7 percent as Morgan Stanley recommended that investors buy the shares. Home Retail Group Plc (HOME) rose 2.2 percent after Deutsche Bank AG upgraded the stock.
The FTSE 100 Index slipped 0.46 point, less than 0.1 percent, to 6,444.79 at 8:59 a.m. in London. The gauge is heading for its sixth weekly retreat as investors weighed valuations and U.S. economic data fueled speculation that the Fed will decide to slow the pace of its bond-buying as soon as next week. The broader FTSE All-Share Index was also little changed today, while Ireland’s ISEQ Index added 0.3 percent.
“Investor confidence has not gone,” Leigh Himsworth, who helps oversee about $1 billion as head of U.K. equities at City Financial Investment Co. in London, said. “People have been thinking of locking down what has been a fantastic year for total return, as valuations had looked a bit stretched. The market is comfortable with the idea that stimulus needs to be turned off soon, but the scope of this still needs to be communicated to the market.”
The FTSE 100 is trading at 13.4 times its members’ projected earnings, down from a high of 13.8 times on Nov. 18. That compares with a five-year average price-earnings ratio of 11.4 times, according to data compiled by Bloomberg.
The Fed has said it may reduce its $85 billion in monthly bond purchases if the economy improves in line with its forecasts. About 34 percent of economists surveyed by Bloomberg on Dec. 6 said the Federal Open Market Committee will probably decide to slow the pace of purchases at its Dec. 17-18 meeting.
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