U.K. stocks fell, led by basic-resource companies, amid renewed concern about levels of sovereign debt and speculation China’s efforts to stem inflation will hamper economic growth.
BHP Billiton Ltd. and Rio Tinto Group fell, dragging the FTSE 350 Mining Index down from its highest level since June 2008, as copper declined for the first time in five days. Royal Bank of Scotland Group Plc paced a selloff in financial shares as Ireland’s bonds led a rout in debt from Portugal to Greece. Aveva Group Plc slid 4.3 percent as the U.K. maker of engineering software reported a fall in profit.
The benchmark FTSE 100 lost 58.25, or 1 percent, to 5,816.94 at the 4:30 p.m. close in London. The gauge rallied 3.5 percent last week, reaching its highest level in two years, after the Federal Reserve pledged to buy more securities to boost the recovery. The FTSE All-Share Index declined 1 percent today, while Ireland’s ISEQ Index lost 1.5 percent.
“Sovereign debt concerns in the euro zone have started to weigh a little more heavily on sentiment,” said Michael Hewson, market analyst at CMC Markets in London.
Government data due for release in China tomorrow will show the inflation rate accelerated to 4 percent in October, according to the median estimate of 28 economists surveyed by Bloomberg. That would be the fastest pace in two years. The government’s full-year inflation target is 3 percent.
China’s central bank will increase the reserve ratio requirement for the nation’s banks by 50 basis points from Nov. 16, according to a statement posted to the People’s Bank of China’s website today.
China “has been the trigger for investors to lock in profits in the heavyweight mining stocks,” said Joshua Raymond, a market strategist at City Index Ltd. in London.
BHP Billiton, the world’s biggest mining company, declined 2.4 percent to 2,410 pence. Rio Tinto, the third-largest, lost 2.7 percent to 4,333 pence as copper, lead, nickel and zinc retreated in London.
Royal Bank of Scotland lost 3.6 percent to 42.16 pence. Barclays Plc declined 2.5 percent to 289.6 pence. The FTSE 350 Banks Index lost 1.2 percent.
The extra yield investors demand to hold Irish government bonds instead of German bunds widened to a record today, as LCH. Clearnet Ltd. demanded its clients place a larger deposit when trading the nation’s securities after yields soared.
The Irish bond headed for its longest losing streak in at least three years. Ten-year Portuguese yields jumped 30 basis points to 7.22 percent, while Greek and Spanish bonds also slumped.
Aveva fell 4.3 percent to 1,454 pence after saying first-half pretax profit dropped to 23.1 million pounds ($36.9 million) from 23.3 million pounds a year earlier.
InterContinental Hotels Group Plc slipped 3.5 percent to 1,100 pence as the owner of the Holiday Inn brand was downgraded to “equalweight” from “overweight” at Barclays Capital. Natixis cut its recommendation on the stock to “neutral” from “buy.”
Fenner Plc climbed 4.7 percent to 281.6 pence as the world’s largest conveyor-belt maker reported full-year sales that topped analysts’ estimates. Net income rose to 26.3 million pounds for the year ended Aug. 31, from 4.5 million pounds a year earlier, the company said. Revenue gained 10 percent to 552.5 million pounds.
Scottish & Southern Energy Plc rose 3.8 percent to 1,160 pence after the U.K.’s second-biggest power producer posted better-than-expected first-half profit.