U.K. stocks declined as a slump at Old Mutual Plc and weaker-than-estimated consumer confidence data in the U.S. overshadowed Federal Reserve Chairman Ben S. Bernanke’s comments that he may provide more stimulus measures.
Old Mutual tumbled 4.8 percent after HSBC Holdings Plc abandoned a bid to buy the insurer’s stake in Nedbank Group Ltd. Xstrata Plc and Kazakhmys Plc led a retreat among mining shares. BT Group Plc, Britain’s largest phone company, climbed the most since July after reaching an agreement over contracts with the U.K. government.
The benchmark FTSE 100 Index fell 23.84, or 0.4 percent, to 5,703.37 at the 4:30 p.m. close in London, paring this week’s gain to 0.8 percent. The gauge has rallied 19 percent since July 1 as investors speculated that the Federal Reserve will announce plans to stimulate economic growth in November as the recovery wanes. The FTSE All-Share Index dropped 0.4 percent today and Ireland’s ISEQ Index lost 0.5 percent.
“Investors are right to be concerned about the fragile labor market in the U.S.,” said Camille Viros, an economist at Barclays Wealth in London, which manages about $211 billion. “A double-dip should be avoided. However, we expect growth to remain sluggish.”
Confidence among U.S. consumers unexpectedly declined in October, with Americans more pessimistic about current economic conditions. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 67.9, the lowest since July, from 68.2 in September. Economists estimated an October reading of 68.9, according to the median forecast in a Bloomberg News survey.
Bernanke today said additional monetary stimulus may be warranted as inflation is too low and unemployment is too high.
“There would appear -- all else being equal -- to be a case for further action,” Bernanke said in the text of remarks given at a Boston Fed conference. He said the central bank could expand asset purchases or change the language in its statement.
Old Mutual, Africa’s biggest insurer, sank 4.8 percent to 138.3 pence, the most in almost six months. HSBC, Europe’s largest bank, abandoned a bid to buy a $7.3 billion controlling stake in South Africa’s Nedbank after eight weeks of talks.
The London-based lender had been in negotiations to purchase as much as 70 percent of Nedbank, including a 52 percent stake owned by Old Mutual. HSBC, the biggest stock in the FTSE 100 by weighting, fell 1.4 percent to 653.3 pence.
Xstrata lost 2.3 percent to 1,311.5 pence. Kazakhmys declined 2.3 percent to 1,384 pence.
BT gained 2.9 percent to 147.4 pence after saying its government contracts remain in place and there is no change to the company’s overall outlook. The U.K. government accounts for about 10 percent of BT’s business.
“This statement should serve to alleviate recent concerns regarding government spending in the near term,” said Mark James, a London-based analyst at Liberum Capital. “It’s a case of: the government wins, BT doesn’t lose.”
Rolls-Royce Group Plc increased 1.1 percent to 635 pence, for a six-day rally. Goldman Sachs Group Inc. raised its recommendation to “buy” from “neutral” and added the world’s second-biggest engine maker to its “conviction buy” list.
“We believe the A&D sector has again entered a phase where the key to outperformance is to select stocks that can deliver sustained, superior returns versus peers,” the broker wrote in a note today.
Computacenter Plc climbed 2.6 percent to 346.5 pence, the highest price since 2006. The supplier of computer services said trading in the third quarter strengthened after an “already positive position” in the first half.