U.K. stocks fell as the European Commission lowered its economic growth forecast for the U.K. and Saudi Arabian shares plunged the most since November 2008 on concern that political unrest may spread to the kingdom.
Kingfisher Plc, Europe’s largest home-improvement retailer, and Marks & Spencer Group Plc, the U.K.’s biggest clothing retailer, declined. HMV Group Plc plunged 22 percent after saying net income will miss estimates. HSBC Holdings Plc retreated 3 percent after UBS AG and Deutsche Bank AG downgraded the shares.
The benchmark FTSE 100 Index retreated 58.25, or 1 percent, to 5,935.76 in London. The FTSE All-Share Index lost 0.9 percent and Ireland’s ISEQ Index slipped 0.7 percent.
“What’s weighing on stocks is declines in the Saudi market,” said Bill Ismail, a senior sales trader at City Index Ltd. in London. “If the Saudis start a revolution, I think the impact will be very heavy on the stock market. That’s what’s spooking the stock market.”
The FTSE 100 has slid 1.8 percent from its highest level this year on Feb. 7. as investors speculated that Arab revolts against unpopular leaders in Tunisia, Egypt and Libya will push oil prices higher, curbing global economic growth.
In Libya, armed rebels in Zawiyah, the nearest population center to Tripoli to fall to leader Muammar Qaddafi’s opponents, stationed themselves at the entrances to the city after repelling an overnight attack by pro-Qaddafi fighters, Ibrahim al-Hajj, a 58-year-old resident, said by telephone. Forces loyal to Qaddafi retook control of Libya’s western border with Tunisia yesterday before attacking and failing to recapture Zawiyah and Misratah, another city in the west of the country.
The European Commission cut its forecast for economic growth in the U.K. in 2011 to 2 percent from the 2.2 percent that it predicted last November. That still beats the U.K.’s 1.4 percent growth in 2010, the commission said. Gross domestic product in the euro area may increase 1.6 percent in 2011, a faster pace than the Brussels-based commission’s earlier forecast for growth of 1.5 percent.
Kingfisher sank 4.5 percent to 243 pence. Marks & Spencer slid 1.9 percent to 339.8 pence.
HMV tumbled 22 percent to 16.3 pence, the lowest price since its initial public offering in 2002. The U.K.’s biggest high-street retailer of CDs and DVDs said full-year pretax profit before one-off items will probably be “moderately below” analysts’ estimates, and it may not meet some banking covenant tests.
HSBC declined 3 percent to 658 pence after Deutsche Bank cut its recommendation on the stock to “hold” from “buy.” Europe’s largest bank by sales was downgraded to “neutral” from buy at UBS.
Cookson jumped 5.2 percent to 688 pence after the world’s biggest maker of ceramic linings for metal smelters said pretax profit rose to 222.1 million pounds ($362.1 million) in 2010 from 75.7 million pounds in 2009 as revenue increased 30 percent to 2.55 billion pounds. Cookson generated 145.3 million pounds of net income in 2010, beating the average analyst estimate for a 142.3 million-pound profit.
The following shares rose or fell. Stock symbols are in parentheses.
Meggitt Plc (MGGT LN) added 4 percent to 351.7 pence. The U.K. maker of engine-monitoring systems for Airbus SAS and Boeing Co. planes said full-year underlying pretax profit rose 9 percent as orders at its civil and energy businesses recovered. Pretax profit excluding amortization and financing costs increased to 256.1 million pounds in 2010 from 234.2 million pounds in 2009.
Provident Financial Plc (PFG LN) slid 5.2 percent to 979.5 pence. The U.K.’s biggest subprime lender said full-year profit climbed 15 percent. Net income advanced to 101.5 million pounds, missing the 102.5 million-pound median estimate of analysts surveyed by Bloomberg.
United Business Media Ltd. (UBM LN) sank 8.6 percent to 651 pence, the largest decline in the Stoxx Europe 600 Index. Collins Stewart Plc said the company faces margin pressure in its News Distribution and Data businesses.