U.K. stocks retreated, extending yesterday’s biggest selloff since March 2009, amid mounting concern that the global economic economy will falter.
Lloyds Banking Group Plc sank 4.8 percent as Deutsche Bank AG said earnings at lenders may be at risk. Wood Group Plc, GKN Plc and Land Securities Group Plc all lost more than 2 percent as analysts downgraded the shares. Autonomy Corp. soared 72 percent after Hewlett-Packard Co. agreed to buy the software developer for $10.3 billion.
The FTSE 100 Index slid 1 percent to 5,040.76 at the 4:30 p.m. close in London after earlier tumbling as much as 3.2 percent and rising 0.3 percent. The gauge lost 5.3 percent this week, extending its selloff from the end of June to 17 percent and wiping more than $500 billion from the value of U.K. shares. The FTSE All-Share Index fell 1 percent today and Ireland’s ISEQ Index lost 1.4 percent.
“Investors continue to have fear about global growth,” said Joshua Raymond, chief market strategist at City Index. “Poor U.S. data has triggered wide moves of risk aversion and sent stock markets tumbling worldwide.”
Exane BNP Paribas said in a report today that investors should sell into any short-term rebound in stocks after economic data raised the risk of a global recession. Releases this week showed Germany’s economy almost stalled in the second quarter while U.S. manufacturing in the New York and Philadelphia regions unexpectedly contracted in August.
U.S. Growth Forecasts
Citigroup Inc. and JPMorgan Chase & Co. cut their forecasts for U.S. growth. Citigroup said the world’s largest economy will expand 1.6 percent in 2011, compared with an earlier estimate of 1.7 percent while JPMorgan trimmed its projection for fourth-quarter growth to 1 percent from 2.5 percent.
Lloyds tumbled 4.8 percent to 28.38 pence, Royal Bank of Scotland Group Plc sank 5.4 percent to 20.77 pence and Barclays Plc fell 2.3 percent to 150.5 pence.
Deutsche Bank financial analyst, Matt Spick said in a report to clients today that European banks may have “negative earnings momentum” in the second half of the year as capital markets revenue “disappoints” and interest rates remain low. He also warned that lenders may face a “slower moving, but still toxic, funding crisis.”
Wood Group dropped 3.6 percent to 507.5 pence after JPMorgan lowered its recommendation for the oil-services company to “neutral” from “overweight,” saying investors should avoid stocks with “poor earnings visibility.”
GKN lost 2.6 percent to 183.5 pence as Goldman Sachs Group Inc. downgraded the automotive-component company to “sell” from “neutral,” saying it has the “least upside” in the industry.
Land Securities slid 3.9 percent to 733 pence after BofA Merrill Lynch Global Research lowered its recommendation for the U.K.’s largest real-estate investment trust to “neutral” from “buy,” saying that discounts on net asset values for the U.K. sector are “here to stay.”
Merrill Lynch also downgraded Derwent London Plc and Great Portland Estates Plc to “underperform” from “neutral.” The shares dropped 2.5 percent to 1,590 pence and 2.9 percent to 356.1 pence, respectively.
Royal Dutch Shell Plc, Europe’s largest oil company, retreated 2.4 percent to 1,883.5 pence as crude headed for a fourth weekly loss. BP Plc fell 2.5 percent to 389.9 pence and Tullow Oil Plc lost 4.8 percent to 946 pence.
Autonomy soared 72 percent to 2,452 pence, the biggest gain since at least 2000, after Hewlett-Packard agreed to buy the U.K.’s second-largest software maker for $42.11 a share.
Stagecoach Group Plc rose 0.7 percent to 233.4 pence after the rail and bus operator in the U.K. and North America announced plans to return 340 million pounds ($561 million) to shareholders.