U.K. stocks closed little changed as concern that interest-rate increases in Europe will hamper economic growth offset gains at telecommunications companies.
Weir Group Plc slid 4.7 percent after the engineering company reported that its net debt more than doubled during 2010. Randgold Resources Ltd. slumped 8.2 percent. Pace Plc plummeted 20 percent as the biggest maker of television digital set-top boxes posted a drop in profit. BT Group Plc and Vodafone Group Plc advanced as Morgan Stanley advised a “maximum overweight” stance on European telecommunication shares.
The benchmark FTSE 100 Index rose 0.98, or less than 0.1 percent, to 5,974.76 at the 4:30 p.m. close in London. The FTSE All-Share Index also gained less than 0.1 percent and Ireland’s ISEQ Index slid 0.1 percent.
“The risk-reward for equities is beginning to deteriorate,” Graham Secker, the London-based head of European equity strategy at Morgan Stanley wrote in a report. “The prospect of European rate hikes is likely to weigh on Europe’s relative performance against other regions around the world.”
The FTSE 100 has rallied 70 percent since the equity market rally began two years ago, returning 84 percent when including reinvested income from dividends, as the global economy recovered from recession and corporate earnings topped estimates. Still, the gauge has fallen 1.9 percent from this year’s highest level on Feb. 8 as investors speculated that popular revolts will spread to the largest oil and gas producers in the Middle East and North Africa, increasing energy costs and harming the global economic recovery.
Crude fell for the first time in three days in New York today as Kuwait said the Organization of Petroleum Exporting Countries has discussed boosting output to replace suspended production from Libya.
The FTSE 100 extended its losses after European Central Bank council member Axel Weber said he doesn’t want to correct market expectations for as many as three quarter-point increases in the bank’s benchmark interest rate this year. The gauge recouped a drop of as much as 1.1 percent in the final hours of trading.
Weir slid 4.7 percent to 1,695 pence as the company said that net debt increased 140 percent to 284 million pounds ($459 million) during 2010. Weir also reported that full-year net income climbed to 185.1 million pounds last year from 128.8 million pounds in 2009.
Randgold, a producer of the metal in West Africa, sank 8.2 percent to 4,480 pence, the biggest drop since 2009 and the largest retreat in the FTSE 100. Ivory Coast President Laurent Gbagbo took control of local purchases and exports of cocoa and coffee, escalating a conflict with rival Alassane Ouattara, the internationally recognized winner of the November election.
Pace slumped 20 percent to 176.4 pence, the largest decline since 2004, as full-year net income fell to 49.9 million pounds from 51.4 million pounds in 2009. Pace also said that its sales will miss analysts’ estimates this year after a customer deferred an order.
Telecommunication stocks advanced after Morgan Stanley raised its recommendation on the industry’s shares to “maximum overweight.” BT Group advanced 4 percent to 191.1 pence as the broker upgraded the U.K.’s biggest fixed-line phone company to “overweight” from “equal weight.” Vodafone gained 1.8 percent to 181.85 pence.
Cairn Energy Plc climbed 1.5 percent to 448 pence as BofA Merrill Lynch Global Research upgraded the oil explorer to “buy” from “neutral.”