U.K. Stocks Drop From Five-Month High on Greek Debt Stalemate

Jan. 24 (Bloomberg) -- U.K. stocks dropped from their highest level since July as talks between policy makers and Greek creditors on a debt-swap deal reached a stalemate.

Barclays Plc and Ashmore Group Plc led a retreat in banks and asset managers, each losing more than 1 percent. Chemring Group Plc plunged 14 percent after reporting earnings. Weir Group Plc shares advanced 2.3 percent.

The FTSE 100 Index slid 30.66, or 0.5 percent, to 5,751.9 at the close in London, falling from its highest level since July 29. The gauge has gained 3.2 percent so far this year, buoyed by better-than-estimated U.S. data and falling bond yields in the euro area. The FTSE-All Share Index retreated 0.6 percent today, while Ireland’s ISEQ Index lost 1 percent.

“Talks with Greek debt holders once more appear to have hit the buffers,” said Rupert Osborne, a futures dealer at IG Index. “The market is being surprisingly patient regarding these ongoing negotiations, but if this lack of progress becomes a recurring theme, it seems unlikely that traders will continue to have such a sanguine view.”

Euro-area policy makers have no deadline for Greece to conclude its talks with private bondholders on a debt swap that both the parties broadly agreed to in October, two euro-region officials said last night.

Finance ministers balked at putting up more taxpayer funds. The debt swap aims to cut 100 billion euros ($130 billion) from the 205 billion euros of privately owned Greek debt, said the officials, who declined to be identified because the discussions are private.

Barclays, Lloyds

Barclays declined 1.9 percent to 218.5 pence as a gauge of U.K. bank shares snapped its longest winning streak since 2005. Lloyds Banking Group Plc slid 2.8 percent to 31.68 pence and Royal Bank of Scotland Group Plc retreated 3.9 percent to 27.05 pence.

Ashmore also fell, slipping 2.4 percent to 355 pence, as RBS downgraded the emerging-markets focused fund manager to “hold” from “buy.”

Chemring tumbled 14 percent to 386.5 pence. The maker of missile-avoidance systems for fighter jets reported full-year pretax profit of 90.8 million pounds ($141.6 million), falling short of the average analyst estimate of 128.9 million pounds. Analysts at JPMorgan Chase & Co. cut their 2012 earnings-per-share estimate for the company by 15 percent to 54.3 pence, citing Chemring’s reduced outlook on growth and margins.

Weir Group gained 2.3 percent to 1,927 pence as Goldman Sachs Group Inc. reiterated its buy recommendation for the shares, citing an exaggerated reaction to falling gas prices.

Carphone Warehouse Group Plc rallied 7.7 percent to 338 pence after Europe’s largest mobile-phone retailer reiterated its full-year earnings guidance and reported growth in post-pay markets.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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