Barclays Plc, which was sued in New York over its private trading venue, dropped the most in two years. LSE rose 6.1 percent after agreeing to buy Frank Russell Co. for $2.7 billion. Bwin.Party Digital Entertainment Plc advanced 3.6 percent after denying a report that it is considering selling some or all of itself as part of a strategic review.
The Stoxx Europe 600 Index slipped less than 0.1 percent to 341.86 at the close in London. The gauge slid as much as 0.5 percent earlier, after President of the Federal Reserve Bank of St. Louis James Bullard said interest rates may rise by March. The benchmark index fell for the past four days, the longest streak in seven weeks, as investors weighed violence in Iraq, and disappointing economic data in the U.S. and euro area.
“This has been the great debate taking place in the market: When will the normalization of policy begin?,” Henk Potts, a strategist at Barclays Wealth & Investment Management in London, said in an interview. “The Fed is starting to give clues about what the exit strategy will look like. What investors should really be focused on is not when the rate rise comes through, but the speed of further rate rises and how that’s going to play out.”
The first interest rate increase by the Fed may come at the end of the first quarter in 2015, Bullard said in an interview on Fox Business. The U.S. economy may grow 3 percent in the coming quarters, he said.
The benchmark index for European equities trades at about 15.3 times the projected earnings of its members, down from a multiple of 15.6 times earnings on June 10 that was its highest valuation since 2009.
National benchmark indexes retreated in nine of the 18 markets in western Europe. Germany’s DAX lost 0.6 percent, France’s CAC 40 slid 0.5 percent, and the U.K.’s FTSE 100 added less than 0.1 percent.
Barclays slid 6.5 percent to 215 pence, its lowest price since November 2012. The lender falsified marketing materials to hide how much high-frequency traders were buying and selling, according to a complaint filed yesterday by New York Attorney General Eric Schneiderman. Barclays runs one of Wall Street’s largest dark pools, a private trading venue where investors can trade stocks mostly anonymously.
Standard Chartered Plc (STAN) dropped 4.3 percent to 1,203 pence. The U.K. bank that generates more than three-quarters of its earnings in Asia said first-half operating profit will probably decline 20 percent from the same period last year because of weaker income from its financial-markets division and increased bad loans.
Ophir Energy Plc retreated 3.9 percent to 231.2 pence. The oil explorer said drilling tests at a well off the coast of Gabon found no significant evidence of hydrocarbons.
LSE climbed 6.1 percent to 1,984 pence. LSE is buying Frank Russell to expand the index business and exchange-traded funds. LSE said the takeover will boost earnings in the first full year, according to a statement.
Bwin.Party rose 3.6 percent to 96 pence. The Gibraltar-based company said it has no plans to break up or put itself up for sale. Two people with knowledge of the matter said earlier that the online gambling company is considering selling some or all if itself as part of a strategic review. The company will decide within two months, one person said.
British property builders reversed losses as Bank of England Governor Mark Carney said measures published today to limit the number of riskier mortgages will leave room for banks to lend at high loan-to-income ratios. The BOE said that the steps won’t have any significant impact on the housing market in the near term.
Taylor Wimpey Plc rose 5.2 percent to 109.9 pence, Barratt Developments Plc added 4.8 percent to 362.9 pence and Persimmon Plc gained 5 percent to 1,259 pence.
Fresenius Medical Care AG advanced 3.2 percent to 48.94 euros. Credit Suisse Group AG raised its rating on the stock to outperform, similar to a buy recommendation, from neutral, with analyst Christoph Gretler citing its current valuation. The stock lost 12 percent in the year through yesterday, trailing the 24 percent gain for a gauge of health-care companies listed on the Stoxx 600.
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