U.K. Stocks Drop, Following Biggest Advance in Two Months

U.K. stocks fell, following yesterday’s biggest gain for the FTSE 100 (UKX) Index in more than two months, as BP Plc (BP/) and shares of food retailers fell.

BP dropped 1.7 percent, contributing the most to the equity benchmark’s decline. J Sainsbury Plc (SBRY) and Tesco Plc (TSCO) each dropped at least 2 percent after a report showed that Britain’s four biggest supermarkets have all lost market share to discount retailers. Talvivaara Mining Co. jumped 20 percent after it began the reorganization of a subsidiary.

The FTSE 100 declined 36.01 points, or 0.6 percent, to 6,486.19 at the close in London as investors awaited the outcome of a two-day meeting of the Federal Open Market Committee in the U.S. The gauge jumped 1.3 percent yesterday after a measure of euro-area factory output beat economists’ estimates. The gauge has still fallen 4.3 percent from an Oct. 30 high. The broader FTSE All-Share Index retreated 0.5 percent today, while Ireland’s ISEQ Index gained 0.5 percent.

“We saw a strong rally yesterday, so we’re seeing a bit of a consolidation now,” said Max King, an investment strategist at Investec Asset Management in London. “People are thinking of the Fed tapering and its impact on markets. Worry about the tapering has held markets back.”

In the U.S., Federal Reserve policy makers begin a two-day meeting today. Some 34 percent of economists predict the central bank will decide to reduce its $85 billion of monthly asset purchases, according to a Bloomberg survey on Dec. 6. That’s up from 17 percent in November.

BP Declines

BP slipped 1.7 percent to 465 pence, the biggest drop in more than two months. Lawyers for plaintiffs in the 2010 Gulf of Mexico oil-spill case said late yesterday that BP’s attorneys made omissions in a declaration last month that amounted to misleading the court, the Financial Times reported. The newspaper cited a filing to the U.S. district court in New Orleans. BP this month won a court order, stopping some payments stemming from its $9.2 billion settlement agreed in the aftermath of the blowout of the Macondo well.

Tesco declined 2 percent to 324.5 pence and Sainsbury slid 4.3 percent to 378.6 pence. Wm Morrison Supermarkets Plc (MRW) retreated 2.9 percent to 256.7 pence. Figures from Kantar Worldpanel showed that the three retailers -- and Wal-Mart Stores Inc.’s Asda -- lost market share in the 12 weeks through Dec. 8. Aldi and Lidl both increased their share of spending.

Dixons Retail Plc (DXNS) dropped 5 percent to 48.7 pence, the biggest drop since June, after saying it expects the second half of the year to present greater challenges than the first six months. The U.K.’s largest electronics retailer also reported first-half underlying pretax profit that more than doubled from a year earlier.

Talvivaara surged 20 percent to 8.25 pence. The nickel miner said a district court in Espoo, Finland approved the corporate restructuring of its Talvivaara Sotkamo Ltd. unit after the company won the support of its creditors.

The stock has more than doubled since the court on Nov. 29 ordered a reorganization of the company to avoid bankruptcy.

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

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

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