U.K. stocks fell for a third day, with Vodafone Group Plc pulling the FTSE 100 Index lower, as investors awaited tomorrow’s announcement by Federal Reserve Chairman Ben S. Bernanke.
Vodafone sank to a three-month low as people familiar with the matter said Verizon Communications Inc. will take longer to approve a dividend. Barratt Developments Plc tumbled 6 percent after the homebuilder didn’t pay an annual dividend. BAE Systems Plc jumped the most in nine years after entering talks to combine with European Aeronautic, Defence & Space Co.
The FTSE 100 slipped 10.11 points, or 0.2 percent, to 5,782.08 at the close in London, erasing gains of as much as 0.5 percent. The gauge has still rallied 9.9 percent since the 2012 low on June 1 as European Central Bank policy makers agreed on an unlimited bond-buying program and speculation grew the Fed will boost stimulus. The FTSE All-Share Index fell 0.1 percent today, while Ireland’s ISEQ Index rose less than 0.1 percent.
“The FTSE 100 has surrendered its gains, as all eyes turn to the Fed decision tomorrow,” Rupert Osborne, a futures dealer at IG Index in London, wrote in e-mailed comments. “The meeting is the first real chance for Mr Bernanke to step up and announce another stimulus programme. There is of course the potential that he will disappoint, which perhaps accounts for the nerves we are seeing this afternoon.”
The volume of shares changing hands in FTSE 100 companies was 70 percent greater than the 30-day average today, according to data compiled by Bloomberg.
The two-day Federal Open Market Committee meeting began in Washington today. The Fed is likely to announce a third round of bond purchases tomorrow, according to almost two-thirds of economists in a Bloomberg survey, while also extending the duration of its zero-interest-rate policy into 2015.
Germany’s Federal Constitutional Court in Karlsruhe today allowed the country to ratify the European Stability Mechanism, while imposing some conditions on its use.
The court dismissed motions filed by groups including a conservative lawmaker and an opposition political party that sought to block the 500 billion-euro ($644 billion) permanent bailout fund. It stipulated that Germany’s 190 billion-euro contribution can’t be increased without legislative approval.
U.K. jobless claims unexpectedly sank the most in more than two years in August as the economy continued to add jobs in the face of a recession. Jobless-benefit claims fell 15,000 to 1.57 million, the Office for National Statistics said today. The median forecast of 30 economists in a Bloomberg survey was for no change in claims.
Vodafone fell 1.5 percent to 174 pence, the lowest since June 15, after two people familiar with the matter said Verizon Wireless’s board doesn’t plan to discuss a potential dividend at a Sept. 19 meeting. A decision could still be made at a December gathering or at an unscheduled board meeting anytime, one of the people said.
Separately, Apple Inc.’s introduction of a new version of the iPhone today may lead to a price war among European telecom operators. Subsidies cost the region’s carriers 12 percent to 14 percent of their wireless revenue, according to data compiled by Bloomberg Industries.
Barratt plunged 6.4 percent to 158.8 pence as the U.K.’s largest homebuilder by volume didn’t pay a dividend. The company, which last made a payment to shareholders in 2008, was projected to disburse 0.7 pence a share to investors, according to Bloomberg Dividend Forecasts that account for earnings and options prices.
BAE surged 11 percent to 363.6 pence, the biggest gain since January 2003, as people familiar with the talks said the arms company is in discussions with EADS on a combination. BAE confirmed the talks in a statement after the close of trading, saying it would own 40 percent of the merged company and EADS would control the rest.
A gauge of banking shares listed on the FTSE 350 Index advanced 1.2 percent to the highest since April. Royal Bank of Scotland Plc gained 3.8 percent to 274.7 pence, while Lloyds Banking Group Plc added 3.9 percent to 38.51 pence. Barclays Plc rose 1.6 percent to 217 pence.
Sage Group Plc climbed 3.1 percent to 315.3 pence, the highest since March 2001. The Daily Mail said the shares gained yesterday amid speculation that private-equity firms led by KKR & Co. and Blackstone Group LP will make a 5.58 billion-pound ($9 billion) bid for the U.K.’s largest software maker. The newspaper didn’t cite anyone. Lucy Legh, an outside spokeswoman for Sage, declined to comment.
Laura Ashley Holdings Plc jumped 9.3 percent to 25 pence after the U.K. fashion retailer said first-half pretax profit excluding exceptional items rose 14 percent to 8.3 million pounds. Chief Operating Officer Sean Anglim said in a phone interview he’s comfortable with the full-year profit estimate of about 20 million pounds forecast by analysts in a Bloomberg survey.
Lonrho Plc climbed 9.2 percent to 9.83 pence, a fifth day of gains. The investment holding company with businesses in mining, transportation, agribusiness and infrastructure in 17 African countries said its Oceanfresh unit won exclusive tuna fishing rights in Mozambique for five years.