U.K. stocks fell for a third day as data from Japan and Korea added to evidence that global growth is slowing, amid speculation that Federal Reserve Chairman Ben S. Bernanke won’t announce new stimulus measures tomorrow.
Xstrata Plc and Glencore International Plc lost more than 2 percent after Qatar Holding LLC said it will vote against a planned merger. Rio Tinto Group slid 2.1 percent as iron ore prices plunged to a three-year low in China. Hays Plc dropped 8.8 percent after saying several markets will stay very challenging. WPP Plc lost 1.6 percent after the world’s largest advertising company cut its sales-growth forecast.
The FTSE 100 Index retreated 0.4 percent to 5,719.45, a four-week low, at the close in London. The broader FTSE All-Share Index and Ireland’s ISEQ Index both also fell 0.4 percent. Stocks declined yesterday as a selloff in mining companies outweighed data showing the U.S. economy expanded at a faster pace in the second quarter than previously estimated.
“Investors started to realize Bernanke probably won’t give more details of a new round of stimulus tomorrow, particularly after the positive GDP number earlier in the week,” said Edmund Shing, an equity strategist at Barclays Plc in London. “It’s not that central bank action won’t happen, it just won’t happen right now, and that leaves markets with uncertainty, which they don’t like. ”
In the U.S., the Fed said late yesterday in its Beige Book business survey that the economy continued to expand “gradually,” damping speculation Bernanke will announce a third round of bond purchases.
Bernanke is due to deliver his annual speech at the central bank’s symposium tomorrow in Jackson Hole, Wyoming. His address in 2010 preceded a second round of bond purchases, or quantitative easing, to support economic growth.
Speculation that central banks will do more to bolster growth has helped drive up equity markets with the S&P 500 rallying 10 percent since June 1 and the Stoxx 600 climbing 13 percent from June 4.
Japan’s retail sales fell 0.8 percent in July from a year earlier, more than economists forecast, as people bought fewer TVs and drank less beer. In South Korea, confidence among manufacturers stayed near the lowest level since the global financial crisis, while data out of Australia showed home-building approvals tumbled by the most in almost a decade.
Xstrata fell 2.5 percent to 901 pence and Glencore dropped 3 percent to 357.45 pence. Qatar Holding, the investment arm of the nation’s sovereign wealth fund, said it plans to vote its 12 percent stake in Xstrata against Glencore’s $31 billion offer for the mining company.
“Although it continues to support the principle of a combination of Glencore with Xstrata, it has determined that it will not support the proposed merger terms,” the fund said today in a statement. Qatar Holding “believes that Xstrata has a strong future, whether in combination with Glencore on acceptable terms or as a stand-alone entity, and that its shares represent an attractive long-term investment.”
Rio Tinto, the second-largest iron-ore producer, lost 2.1 percent to 2,715.5 pence after iron ore prices fell. BHP Billiton Ltd., the world’s biggest mining group, declined 3.3 percent to 1,842 pence
Vedanta Resources Plc and Kazakhmys Plc, which mine copper in India and Kazakhstan, slid 3.2 percent to 861 pence, and 4.9 percent to 586.5 pence, respectively. Copper consumption in China, the world’s biggest user, is expected to expand this year at the slowest rate since 1997 as economic growth cools, according to Beijing Antaike Information Development Co.
Barclays Plc fell 1.5 percent to 183.5 pence as the second-biggest U.K. lender picked Antony Jenkins as its CEO, promoting the head of its consumer banking business as the U.K. lender recovers from the Libor scandal that forced out Robert Diamond.
Barclays confirmed after the close of trading yesterday that it is facing a criminal probe into fees it paid to Qatar’s sovereign wealth fund in 2008 as the bank sought to raise money to avoid a government bailout.
Hays dropped 8.8 percent to 69.9 pence after the British recruiter said the economic backdrop will remain hard, while several markets remain very challenging. Hays reported full-year sales of 3.65 billion pounds ($5.8 billion), compared with analyst estimates of 3.63 billion pounds, while adjusted earnings per share were 5.47 pence, beating a 5.40 pence estimate.
WPP slid 1.6 percent to 818.5 pence after the advertising company reduced its full-year revenue-growth forecast as clients cut spending amid the European debt crisis. Sales excluding the impact of acquisitions and currency fluctuations will grow “close to 3.5 percent” this year versus an earlier forecast for 4 percent, the company said.
JJB Sports Plc, the Lancashire-based sporting goods retailer, plunged 84 percent to 0.39 pence, its lowest price since at least 1994, after the company was put up for sale, saying it won’t be able to raise the level of funds necessary to execute a turnaround.