U.K. Stocks Fall as ECB Loans to Banks Fail to Ease Debt Concern

U.K. stocks retreated, sending the FTSE 100 lower for the third day in four, after European Central Bank long-term loans to the euro area’s lenders failed to ease concern that the debt crisis will intensify.

Marks & Spencer Group Plc led retailers lower as consumer confidence fell to the lowest level since 2009. Essar Energy Plc dropped 3.4 percent after the company’s chairman temporarily stepped aside amid an investigation. Sage Group Plc paced a selloff in software companies after Oracle Corp.’s earnings missed analyst estimates.

The benchmark FTSE 100 dropped 0.6 percent to 5,389.74 at the close in London, after earlier rising as much as 1.1 percent. The gauge has lost 8.7 percent this year amid concern that the debt crisis will weaken global growth. The broader FTSE All-Share Index slipped 0.5 percent today, while Ireland’s ISEQ Index increased 1 percent.

“Euphoria has proved to be short lived,” said Yusuf Heusen, a sales trader at IG Index in London. “The added liquidity from the ECB is being seen as just another quick shot in the arm rather than anything more meaningful.”

Shares fell as the ECB awarded 489 billion euros ($638 billion) in loans to Europe’s banks in the latest attempt to tame the debt crisis. That compared with a median economist forecast for 293 billion euros.

Marks & Spencer Falls

Marks & Spencer lost 2.2 percent to 302.7 pence, J Sainsbury Plc declined 1.9 percent to 287.3 pence and Tesco Plc slid 1.3 percent to 382.9 pence.

Retailers fell as a GfK NOP Ltd. survey showed U.K. consumer confidence fell this month to its lowest level since the depths of the financial crisis in Feb. 2009 amid increasing pessimism about the economy.

Separately, Goldman Sachs Group Inc. wrote in a report that Christmas trading statements from U.K. retailers will probably show a deterioration.

Home Retail Group Plc slid 3.3 percent to 79.9 pence, Dixons Retail Plc fell 2 percent to 9.56 pence and Kingfisher Plc lost 2 percent to 240.3 pence.

Essar Energy declined 3.4 percent to 171.9 pence after the company said Ravi Ruia will temporarily step aside as chairman following allegations by India’s Central Bureau of Investigation.

An Indian court asked three officials of Essar Group, including Ruia, to appear before it on Jan. 27 as it probes charges linked to the 2008 sale of licenses to run mobile-phone services. The charges relate to cheating and conspiring to provide incorrect information to the government while applying for permits. Ruia and the company deny all the charges.

Cairn Energy Slides

Cairn Energy Plc also retreated, falling 1.8 percent to 257.8 pence and BP Plc, Europe’s second-largest oil company, slid 1 percent to 439.55 pence.

Sage Group, the U.K.’s largest software maker, declined 2.4 percent to 284.8 pence. European software companies tumbled as U.S. rival Oracle, the world’s second-largest business-software maker, reported sales and profit that missed analysts’ estimates.

Elsewhere, LLoyds Banking Group Plc rallied 5.6 percent to 24.94 pence as Exane BNP Paribas raised its recommendation for the U.K.’s biggest mortgage lender to “outperform” from “underperform,” saying the current share price discounts “too much risk.”

“The current share price appears to imply little or no franchise value for the ‘core’ business,” wrote Tom Rayner, a London-based analyst, in a note to clients. “We believe this reflects fears of a liquidity freeze and/or value destroying losses from the non-core portfolio.”

Hardy Underwriting

Hardy Underwriting Bermuda Ltd. jumped 11 percent to 193.88 pence after Beazley Plc said it wanted to re-open talks to buy the Lloyd’s of London insurer.

Gem Diamonds Ltd. increased 5.1 percent to 191.7 pence after Goldman Sachs Group Inc. upgraded the diamond producer to “buy” from “neutral,” saying the shares’ recent underperformance provided an attractive entry point.

Thorntons Plc tumbled 39 percent to 23.25 pence, its lowest price since 1989, as the chocolate maker said full-year profit will miss estimates because supermarket promotions have affected its margins.

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