U.K. stocks fell for a third day, extending the FTSE 100 Index’s biggest weekly drop since September, as concern about the impending U.S. fiscal cliff weighed on investor sentiment.
Rentokil Initial Plc declined 1.2 percent after saying “challenging conditions” limited revenue growth in the third quarter. Tullett Prebon Plc sank the most in more than two years after the inter-dealer broker said sales declined amid subdued trading. International Consolidated Airlines Group climbed 1.6 percent after announcing job cuts at its Spanish unit.
The FTSE 100 slipped 6.37 points, or 0.1 percent, to 5,769.68 at the close in London. The benchmark gauge has retreated 1.7 percent this week, the biggest decline since Sept. 28. The broader FTSE All-Share Index lost 0.2 today, while Ireland’s ISEQ Index rose 0.1 percent.
“The post-election setback in global equity markets has caused consternation for investors,” Ian Williams, a strategist at Peel Hunt LLP in London, wrote in a note to clients today. “The removal of one area of uncertainty was supposed to refuel risk appetite. Why the opposite reaction of the past two sessions? Concerns about the U.S. fiscal cliff provide one obvious explanation.”
Equities have slumped around the world this week as investors’ focus turned to the impending U.S. budget debate after President Barack Obama’s re-election on Nov. 6. Obama’s victory and a split Congress raised concern lawmakers will be unable to compromise and avoid $607 billion of automatic spending cuts and tax increases at the beginning of next year.
The Congressional Budget Office yesterday reaffirmed its previous projection that allowing the budget measures to take effect would lead to a U.S. recession in the first half of 2013. Fitch Ratings Managing Director Ed Parker also said in an interview yesterday that the world’s largest economy will tip back into contraction should policy makers fail to reach a deal.
The U.K.’s FTSE 100 has still climbed 3.5 percent in 2012 and 9.7 percent from this year’s low on June 1 as central banks around the world stepped up stimulus measures to drive economic growth. U.S. data today showed confidence among U.S. consumers rose more than forecast this month.
Rentokil paced declining shares, falling 1.2 percent to 87 pence, after the world’s largest pest-control company said “challenging conditions” across Europe and the U.K. held back revenue growth in the third quarter.
The company also said its City Link business will report a fourth-quarter loss of 25 million pounds ($39.9 million), wider than an earlier forecast of 20 million pounds.
Tullett Prebon plunged 8.4 percent to 240 pence, the biggest drop since May 2010, after the broker reported a 12 percent decline in four-month revenue to 276 million pounds.
ICAP Plc, the world’s largest broker of transactions between banks, lost 1.2 percent to 311.4 pence.
Talvivaara Mining Co. plummeted 15 percent to 103.5 pence, the lowest in almost four years, as the army was called in to help plug a leak of uranium that has collected in the Finnish nickel producer’s waste pond.
IAG gained 1.6 percent to 170.6 pence after the parent of British Airways said it will eliminate 4,500 jobs at Iberia and cut 25 aircraft from the Spanish unit’s fleet to reduce capacity by 15 percent in 2013.
The company said there will also be “permanent salary adjustments” as it seeks a turnaround in profitability of at least 600 million euros ($766 million) from this year’s level.
Admiral Group Plc added 3.4 percent to 1,054 pence after Bank of America Corp. raised its recommendation for the car insurer to buy from underperform, saying it now views the company as an income stock. Admiral has the highest 2013 estimated dividend yield within the industry at 9.1 percent, according to a report sent to clients today.
Croda International Plc increased 2.8 percent to 2,271 pence after Barclays Plc upgraded the world’s second-largest maker of cosmetic ingredients to equal weight from underweight, meaning investors’ holdings should match the level represented in benchmark indexes.
Rolls-Royce Holdings Plc climbed 1.9 percent to 877 pence after the second-biggest maker of commercial aircraft engines confirmed its full-year guidance and said it expects “good growth in underlying revenue and underlying profit.”
The company also named Alain Michaelis to replace retiring Chief Operating Officer Mike Terrett. Michaelis also runs the company’s gas turbine supply chain operation.
The volume of shares changing hands in FTSE 100 companies today was 8.6 percent lower than the 30-day average, data compiled by Bloomberg show.