U.K. Stocks Fall; FTSE 100 Posts Worst Quarterly Drop Since ’02

U.K. stocks declined, with the benchmark FTSE 100 Index posting its biggest quarterly drop since 2002, after reports on Chinese manufacturing and German retail sales added to evidence that the economy is faltering.

Standard Chartered Plc, Kazakhmys Plc and Intertek Group Plc, which all make at least 30 percent of their revenue in Asia, led the drop. BP Plc fell after a person with knowledge of the matter said the company’s $7.1 billion deal to sell Pan American Energy LLC is at risk of collapse. WPP Plc, the world’s largest advertising company, declined 4.5 percent as analysts downgraded the shares.

The benchmark FTSE 100 Index retreated 68.36, or 1.3 percent, to 5,128.48 in London, for a 4.9 percent decline this month. The index has risen 1.2 percent this week as policy makers increased efforts to contain the region’s sovereign-debt crisis. The gauge still posted a 14 percent loss this quarter amid concern that Greece’s debt woes will spread to other countries in the region and that the economy is stalling.

“Luxury goods manufacturers are feeling the pinch on concerns over a Chinese slowdown,” Ben Critchley, market strategist at IG Index in London, wrote. “We have seen the FTSE 100 steadily edge its way lower. This market still feels like one that is in a holding pattern waiting for the next stage of the European drama to unfold.”

The broader FTSE All-Share Index decreased 1.3 percent today and Ireland’s ISEQ Index slipped 0.1 percent.

Chinese Economy

In China, the reading of 49.9 for the September purchasing managers’ index, released by HSBC Holdings Plc and Markit Economics today, was unchanged from August and compared with a preliminary 49.4 figure published last week. The gauge was below 50, the level that separates expansion from contraction, for eight months through March 2009.

German retail sales, adjusted for inflation and seasonal swings, slumped 2.9 from July, when they rose 0.3 percent, the Federal Statistics Office in Wiesbaden said today.

Standard Chartered, the U.K.’s second-largest bank by market value, lost 5.2 percent to 1,287 pence. The lender makes 57 percent of its revenue from the Asia Pacific, according to Bloomberg data.

Copper producer Kazakhmys, which derives 48 percent of its revenue from China, declined 4.9 percent to 793 pence.

Intertek Drops

Intertek, which offers product inspection and certification services, fell 9.5 percent to 1,855 pence. The company makes 38 percent of its revenue in Asia, according to Bloomberg data.

Burberry Group Plc, the U.K.’s largest luxury-goods maker, dropped 2.3 percent to 1,174 pence. The company gets about 33 percent of its sales in the Asia Pacific region, Bloomberg data show.

HSBC Holdings Plc, a bank that gets about 30 percent of revenue from Hong Kong and the rest of the Asia Pacific, slid 3.1 percent to 496.9 pence.

BP slipped 0.8 percent to 388.50 pence, after erasing gains of as much as 0.8 percent earlier. BP’s $7.1 billion deal to sell Argentine crude producer Pan American Energy is at risk of collapse, jeopardizing China’s biggest energy acquisition this year, according to a person with knowledge of the matter.

BP’s agreement to sell its 60 percent stake to partner Bridas Corp., a company owned by Chinese oil producer Cnooc Ltd. and Argentina’s billionaire Bulgheroni family, has hit opposition from politicians and may not complete when the accord expires in November, the person said, declining to be identified as the details are private.

Seeking Approvals

“Deals of this scale take time to finalize with competition authorities,” London-based BP spokesman Robert Wine said. “We are working with the other shareholders in PAE to secure competition approvals and complete the deal. We can confirm the deal has not yet closed as Argentine competition approvals remain outstanding, but we remain optimistic that these approvals will be granted in due course.”

WPP slipped 4.5 percent to 601 pence as the stock was cut to “reduce” from “neutral” at Natixis.

RPC Group Plc jumped 3.1 percent to 337 pence. The British maker of plastic containers for consumer goods said revenue in the first half of its financial year is forecast to be “significantly higher” compared with the same period a year earlier.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE