U.K. stocks slid, sending the FTSE 100 Index lower for a third day, after North Korea fired artillery shells into South Korea and as inflation concerns led Chinese stocks lower.
Standard Chartered Plc lost 2.7 percent. Bank of Ireland Plc and Allied Irish Banks Plc tumbled for a second day in Ireland. BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group both declined at least 2.2 percent.
The benchmark FTSE 100 decreased 99.55, or 1.8 percent, to 5,581.28 at the 4:30 p.m. close in London, for the worst three-day performance since July 1. The FTSE All-Share Index slipped 1.7 percent, while Ireland’s ISEQ Index tumbled 3.4 percent.
South Korea scrambled fighter jets and returned fire after North Korea lobbed dozens of shells into its waters and at an island, killing two soldiers. Television footage showed smoke billowing from Yeonpyeong island off South Korea’s northwest coast, where the shelling set fire to houses, local television channel YTN said.
“Investors are shaken by North Korea’s shelling of its neighbor and are still worried about just how far the sovereign- debt contagion will spread,” said Peter Braendle, a fund manager at Swisscanto Asset Management AG in Zurich, which oversees $62 billion.
Stocks fell around the world after the international bailout for Ireland failed to stem concern that Europe’s sovereign-debt crisis will spread to other indebted countries such as Portugal and Spain.
Irish Prime Minister Brian Cowen late yesterday said he will seek national elections early next year after his government passes its 2011 budget. The announcement came hours after the Green Party said it would pull out of the ruling coalition following the budget vote, saying Cowen misled voters in negotiating the bailout.
Bank of Ireland plummeted 25 percent to 29.2 euro cents. Allied Irish dropped 19 percent to 33 cents. European Union officials estimate that a rescue package for Ireland may amount to about 85 billion euros ($114 billion), according to two officials familiar with the talks.
Standard Chartered, the British lender that generates the majority of its earnings in Asia, slipped 2.7 percent to 1,737 pence, while HSBC Holdings plc retreated 1.5 percent to 643.9 pence, the lowest price since Aug. 31.
Barclays Plc lost 2.1 percent to 264.25 pence. Two transfers to the U.K. lender totaling about $1.3 billion from Lehman Brothers Holdings Inc. in September 2008 may have violated securities laws, the U.S. Securities and Exchange Commission said.
Basic-resources stocks tumbled as metal prices decreased for a third day. China’s stocks slid as concern mounted that the government will intensify steps to tame inflation, potentially curbing consumption in the world’s biggest user.
China’s biggest banks are close to reaching annual lending quotas and plan to stop expanding their loan books to avoid exceeding the limits, according to four people with knowledge of the matter.
BHP Billiton lost 2.2 percent to 2,268 pence as copper, zinc and aluminum retreated on the London Metal Exchange. Rio Tinto declined 2.8 percent to 4,070 pence. Xstrata Plc, the largest exporter of coal used for power, shed 2.2 percent to 1,270 pence.
Mitchells & Butlers Plc, the U.K. owner of the All Bar One chain, tumbled 2.6 percent to 344.6 pence as it posted a full-year loss on lower sales of beverages at its public houses.
Laird Plc rose the most in more than three months, gaining 9.1 percent to 152 pence. The biggest maker of electromagnetic shields for mobile phones announced it will buy Cattron Group International Inc. for $90 million in cash. The deal will be “significantly earnings-enhancing” in 2011, the company said.
De La Rue Plc, the world’s biggest printer of banknotes, tumbled 11 percent to 557.5 pence after it said there “remains uncertainty” about the financial impact of a forced stop in paper shipments. In September, De La Rue discovered that some employees had deliberately falsified certain paper specification test certificates for certain customers.