U.K. Stocks Little Changed After U.S. Services Data

U.K. stocks were little changed, following the FTSE 100 (UKX) Index’s first weekly decline in three weeks, after reports showed activity in the British and U.S. services industries expanded at a slower pace last month.

RSA Insurance Group Plc (RSA) jumped the most since February 2009 after a report that the insurer’s Irish unit won’t require further capital injection. Centamin Plc (CEY) increased 2.9 percent after its full-year gold production exceeded the company’s forecast. Marks & Spencer Group Plc (MKS) slipped before it releases quarterly sales figures this week.

The FTSE 100 added 0.06 point, less than 0.1 percent, to 6,730.73 at the close of trading in London. The benchmark slid 0.3 percent last week after completing its best year since 2009. The gauge posted the second-smallest rally of developed European markets tracked by Bloomberg in 2013. The broader FTSE All-Share Index gained less than 0.1 percent today and Ireland’s ISEQ Index rose 0.2 percent.

“With valuation and sentiment having risen significantly, expectations are higher,” Graham Secker, a strategist at Morgan Stanley in London, wrote in a report. “The key theme that developed through 2013 was investors’ willingness to buy into the European recovery dream. European-exposed stocks have outperformed significantly over the last year and now look expensive relative to the market. We would take profits in this area and switch exposure to U.S. or China.”

American Economy

U.S. data showed services industries, which account for about 90 percent of the world’s largest economy, expanded at a slower pace in December. The Institute for Supply Management’s non-manufacturing index fell to 53 last month from November’s 53.9, according to the median forecast. The index has remained above the 50 level, the line that divides expansion from contraction, since the end of 2009. A separate report showed factory orders increased 1.8 percent in November.

In the U.K., a Markit Economics report showed a services gauge based on a survey of purchasing managers fell to 58.8 in December from 60 in the prior month, missing the 60.3 median economist prediction compiled by Bloomberg.

RSA Insurance jumped 6.2 percent to 97.9 pence. A report led by PricewaterhouseCoopers LLP, due Jan. 9, will probably show irregular accounting and a capital shortfall at its Irish unit were isolated incidents, The Sunday Telegraph reported without saying where it got the information. RSA spokesman Jon Sellors declined to comment on the article.

Separately, UBS AG added the insurer to its list of most preferred stocks, with analyst James Shuck predicting RSA won’t need to raise capital from shareholders in a rights issue or sell important parts of its business.

Gold Output

Centamin rose 2.9 percent to 46.55 pence. Gold output increased 36 percent in 2013 to 356,943 ounces, the company said. That exceeded its prediction in March for output to reach 320,000 ounces. Centamin was the best-performing London-listed commodity producer in 2013, gaining 14 percent.

Petrofac Ltd. (PFC) added 0.8 percent to 1,231 pence as Deutsche Bank AG raised its rating on the stock to buy from hold, describing its price-to-earnings multiple as undemanding. The stock, which lost 25 percent last year, is trading at 10.1 times projected earnings, less than its five-year average of 13.5. A gauge of European oil-and-gas companies is trading at a multiple of 10.5, data compiled by Bloomberg showed.

Marks & Spencer slipped 0.8 percent to 440.3 pence before the food and clothing retailer reports third-quarter sales on Jan. 9. The stock lost 11 percent in December, its worst month in three years.

A gauge of London-listed mining stocks fell 1.9 percent, for a fourth day of losses, as some industrial metals slipped on the London Metal Exchange. Rio Tinto Group lost 3.1 percent to 3,266 pence, while Anglo American Plc declined 1.7 percent to 1,275 pence.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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