U.K. stocks retreated, sending the FTSE 100 Index down the most this year, as investors weighed the private-creditor support for a deal that Greece needs to restructure its debt.
Lonmin Plc led a gauge of mining shares to a two-month low as metals prices declined. Aviva Plc lost 4.7 percent after analysts downgraded the insurer. Meggitt Plc slid 4.9 percent after the company reported earnings.
The benchmark FTSE 100 dropped 1.9 percent to 5,765.8 at the close in London, its largest selloff since Dec. 14. The FTSE All-Share Index also tumbled 1.9 percent today, while Ireland’s ISEQ Index sank 2.5 percent.
“Investors have had their fingers on the sell button when it became apparent that less than half of Greece’s creditors have agreed to participate in the critical bond swap,” said Angus Campbell, head of sales at Capital Spreads in London. They “have fled stocks and piled into safe-haven assets like the dollar.”
Greece has set a 75 percent participation rate as the threshold for proceeding with the debt swap which is required for an international bailout. So far, investors holding about 20 percent of Greek bonds have said they will support the restructuring.
The country’s private creditors have until March 8 to participate in the transaction. If the proposal wins their support, Greece will reduce its borrowings by 106 billion euros ($139 billion), lowering its debt to 120.5 percent of gross domestic product by 2020.
Today’s selloff has trimmed this year rally in the FTSE 100 to 3.5 percent. The gauge has advanced for three straight months amid better-than-estimated U.S. economic reports and speculation that the euro area would contain its debt crisis.
Mining Companies Decline
The FTSE 350 Mining Index dropped 2.2 percent to its lowest level since Jan. 9 as a stronger dollar curbed demand for gold as an alternative investment and base metals fell amid concern demand may weaken as the euro area’s economies shrink.
A report today showed gross domestic product in the 17-nation euro area dropped 0.3 percent in the fourth quarter from the third. A separate release showed retail sales in the U.K. slid for a second month.
Lonmin decreased 4.7 percent to 1,018 pence, Antofagasta Plc slid 4.3 percent to 1,237 pence and Anglo American Plc fell 2.6 percent to 2,502 pence.
Aviva lost 4.7 percent to 350.2 pence as Exane BNP Paribas lowered its recommendation for the U.K.’s second-biggest insurer by market value to “underperform” from “neutral,” saying the company’s earnings will be lower and cash flows under pressure in the “current low-yield, low-growth environment.” The insurer is scheduled to report its financial results on March 8.
Meggitt, Wood Group
Meggitt sank 4.9 percent to 380.5 pence, trimming its advance so far this year to 7.9 percent. The company today reported full-year adjusted pretax profit of 323 million pounds ($508 million), in line with analyst estimates.
Chief Executive Officer, Terry Twigger, said the company, which makes aircraft-engine sensors, wheels and brakes, may make further acquisitions after spending $685 million to buy Pacific Scientific Aerospace last year.
Elsewhere, John Wood Group Plc plunged 7.6 percent to 705.5 pence, trimming its climb so far this year to 10 percent. The U.K. oil-services provider today reported a 16 percent increase in earnings before interest, taxes and amortization to $398.7 million in 2011.
Cable & Wireless Worldwide
Cable & Wireless Worldwide Plc lost 6.7 percent to 31.21 pence after surging 23 percent over the previous four days. The Telegraph reported speculation that Vodafone Group Plc may not make an offer by the Takeover Panel’s March 12 deadline.
Tata Communications Ltd. said it may make a cash offer for Cable & Wireless, setting up a potential rivalry with Vodafone to win control of the owner of the U.K.’s largest business fiber network.
Misys Plc climbed 1 percent to 338.5 pence after the Financial Times reported that Temenos Group AG may sweeten its planned $2 billion merger with the U.K. company.