Feb. 28 (Bloomberg) -- U.K. stocks dropped, with the benchmark FTSE 100 Index paring this month’s rally, as advances in Hays Plc and Essar Energy Plc were offset by a slump at HSBC Holdings Plc as the bank reported earnings that missed estimates.
HSBC, Europe’s biggest bank, sank 4.7 percent, the biggest tumble in a year. Essar Energy led rising shares on the benchmark FTSE 100 Index after Credit Suisse Group AG advised buying shares of the Indian power plant developer.
The FTSE 100 slid 0.1 percent to 5,994.01 at the 4:30 p.m. close in London, paring this month’s increase to 2.2 percent. The gauge has slid 1.6 percent from this year’s highest level on Feb. 8. amid speculation that political instability in some Middle Eastern countries will push oil prices higher and curb economic growth. The FTSE All-Share Index also fell 0.1 percent today and Ireland’s ISEQ Index advanced 2.1 percent.
“We remain biased towards our pro-risk strategy,” David Shairp, a global strategist at JPMorgan Asset Management in London, wrote in a report today. “There is little evidence across asset classes to suggest a broader move downward in risk assets.”
Recent losses have dragged the FTSE 100’s valuation to less than 14 times the reported earnings of its companies, the lowest level since August.
In Libya, rebels established a transitional authority with Muammar Qaddafi’s former Justice Minister Moustafa Abdel Jalil as it head. Qaddafi, who has run the country for 41 years, vowed to fight until his “last drop of blood,” sending oil prices soaring as investors speculated that the conflict will further disrupt Libya’s oil production.
HSBC fell 4.7 percent to 678 pence after full-year earnings missed analyst estimates as investment banking income shrank and costs rose to an “unacceptable” level. Net income rose to $13.2 billion in 2010 from $5.83 billion the previous year, missing the $13.72 billion median estimate of 15 analysts surveyed by Bloomberg.
Essar Energy rallied 3.5 percent to 517 pence. Credit Suisse rated the shares “outperform” in new coverage.
Hays Plc climbed 4 percent to 124.8 pence. The U.K.’s largest recruitment agency said first-half net fees grew 20 percent to 326.1 million pounds.
Associated British Foods Plc retreated 5.9 percent to 966.5 pence, a seven-month low, after saying there’s been a “noticeable slowing down” of U.K. demand at its Primark clothing stores.
Punch Taverns Plc lost 1.5 percent to 66.4 pence as Deutsche Bank AG downgraded the shares to “sell” from “hold.”
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