U.K. stocks were little changed as a surge in Boxing Day retail sales offset concern that the euro-area debt crisis will harm the economic recovery.
Tesco Plc, the U.K.’s largest supermarket chain, climbed 2.3 percent and Debenhams Plc rallied 1.5 percent as more people went shopping on the day after Christmas. ITV Plc, Britain’s biggest commercial broadcaster, advanced 1.6 percent. Evraz Plc led mining companies lower as an earthquake temporarily halted operations in Siberia.
The benchmark FTSE 100 Index declined 5.3, or 0.1 percent, to 5,507.4 at the close in London, bringing this year’s decline to 6.7 percent. The FTSE All-Share Index was also little changed today, while Ireland’s ISEQ slid 0.5 percent, snapping a seven-day rally.
Investors “seem quite some distance away from turning optimistic given the difficult economic conditions already cast within the first quarter of 2012,” said Andrew Wilkinson, the chief economic strategist at Miller Tabak & Co. in New York.
The FTSE 100 has retreated in 2011 as the debt crisis spread across Europe, with Spanish and Italian borrowing costs reaching euro-era records. The gauge rallied 11 percent from this year’s lowest level on Oct. 4 amid better-than-estimated U.S. economic data and speculation that European leaders are moving to stem the crisis. Trading in London was closed over the past two days for Christmas.
ECB Balance Sheet
Stocks pared gains today as the European Central Bank said its balance sheet soared to a record after it lent financial institutions more money last week in an attempt to keep credit flowing to the economy during the debt crisis.
Lending to euro-area banks jumped by 214 billion euros ($280 billion) to 879 billion euros in the week ended Dec. 23, the Frankfurt-based ECB said. Its balance sheet increased 239 billion euros to 2.73 trillion euros.
Italy sold 9 billion euros of six-month bills at an average yield of 3.251 percent today, compared with a 14-year-high of 6.504 percent at an auction of similar-maturity debt on Nov. 25. The Treasury also sold 1.7 billion euros of zero-coupon notes due 2013 at 4.853 percent.
The government will auction as much as 8.5 billion euros of debt due in 2014, 2018, 2021 and 2022 tomorrow.
Britain faces the “toughest” job market in two decades with the number of working people likely to fall by 120,000 in 2012, the Chartered Institute of Personnel and Development said.
Weaker Jobs Market
“The U.K. jobs market will be weaker than at any time since the recession of the early 1990s,” John Philpott, chief economic adviser at the CIPD, an association for human-resource professionals, said in a statement. “The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the U.K. workforce far more than it did in the recession of 2008-9.”
Tesco rose 2.3 percent to 399.8 pence and Debenhams, the U.K.’s second-largest department-store owner, advanced 1.5 percent to 57.45 pence. U.K. shopper numbers for Dec. 26 jumped 22 percent from a year earlier, market research company Experian FootFall reported yesterday.
ITV increased 1.6 percent to 65.5 pence, the highest level in six weeks.
British American Tobacco Plc, Europe’s largest cigarette maker, climbed 2 percent to 3,057.5 pence, a record high.
Gambling Companies Gain
Bwin.Party Digital Entertainment Plc surged 23 percent to 160 pence, the biggest gain since April. Exane BNP Paribas SA analysts reiterated an “outperform” rating on the gambling company, saying there is likely to be an improvement in the regulatory framework in Germany and potential upside from a U.S. legal opinion on online gambling.
William Hill Plc, a U.K. bookmaker with about 2,350 betting shops, advanced 3.2 percent to 194.7 pence. Playtech Ltd., a developer of software for gaming companies, climbed 15 percent to 266 pence.
Evraz sank 4.9 percent to 373.3 pence, the biggest drop this month. The Russian steelmaker part-owned by billionaire Roman Abramovich temporarily halted underground mining in Siberia halted after a 6.7 magnitude earthquake in a nearby region late yesterday.
Rio Tinto Group, the world’s second-largest mining company, slid 2.1 percent to 3,091 pence.