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U.K.’s FTSE 100 Declines to Three-Month Low After Japan Tsunami

March 11 (Bloomberg) -- U.K. stocks fell to a three-month low, led by insurers, after the biggest earthquake on record in Japan shook buildings across Tokyo and unleashed a seven-meter-high tsunami that killed hundreds.

RSA Insurance Group Plc dropped 2.6 percent and Prudential Plc slid 1.9 percent. Dixons Retail Plc, the U.K’s largest consumer-electronics retailer, fell 2.3 percent after Citigroup Inc. cut its recommendation for the stock.

The benchmark FTSE 100 Index retreated 16.62, or 0.3 percent, to 5,828.67 at the 5:35 p.m. close in London, the lowest level since Dec. 10. The benchmark had a weekly loss of 2.7 percent. The FTSE All-Share Index dropped 0.4 percent today, while Ireland’s ISEQ Index lost 1 percent.

Global stocks fell for a third day today, and the Dow Jones Industrial Average in the U.S. yesterday posted its steepest decline since August, as violence in Libya, a slowdown in China’s export growth and concern that some European countries may fail to service debt hurt the outlook for equities.

“People may be starting to worry we’ll see a stronger correction, it does look quite weak,” said David Jones, chief market strategist at IG Index Plc. “The selling pressure has increased over the last few sessions and with the FTSE 100 at new lows it is raising some concern.”

The FTSE 100 gained as much as 3.2 percent this year before erasing the advance yesterday. The gauge has still climbed 65 percent since March 2009 as central banks lowered interest rates to record lows and companies boosted earnings.

Risk/Reward

“The risk-reward for investors is beginning to deteriorate,” Graham Secker, head of European equity strategy at Morgan Stanley in London, said in an interview on Bloomberg Television. “There are a number of factors that make us cautious in the short term. We are suggesting we take a little European bit of money off the table.”

RSA, the U.K.’s biggest non-life insurer by market value, declined 2.6 percent to 133 pence. Prudential fell 1.9 percent to 721 pence. Aviva Plc declined 1.5 percent to 453.9 pence. The Stoxx Insurance 600 Index of European insurers declined 2.2 percent, the worst performance among 19 industries in the broader Stoxx 600.

Japan’s earthquake, the world’s strongest in more than six years, struck the coast of the country. Many are missing after the quake and waves as high as 23 feet swept ashore, according to state broadcaster NHK. Airports were closed and bullet train services suspended, and an emergency evacuation order was issued for a nuclear power plant north of Tokyo.

Dixons dropped 2.3 percent to 17.16 pence. The shares were cut to “hold” from “buy” at Citigroup, which said it cut profit estimates given indication of a “ step-down in high-ticket consumer demand patterns.”

FirstGroup, JJB

FirstGroup Plc sank 3.6 percent to 347.4 pence. The Aberdeen, Scotland-based transport company said the trading environment for its First Student school-bus unit “remains challenging.”

JJB Sports Plc dropped 10 percent to 13.5 pence. JD Sports Fashion Plc said it terminated talks to take over the sportswear retailer and has “no intention” of making an offer. JD rose 5.3 percent to 930 pence.

Aga Rangemaster Group Plc, which makes cast-iron cookers, jumped 13 percent to 138 pence, leading gains in the All-Share index. The company reported a full-year operating profit, from a loss a year earlier.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net.

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