U.K. stocks declined for a second day, with the FTSE 100 Index falling to a two-month low, as retail sales dropped more than forecast and concern grew that the U.S. budget deadlock will harm the global economy.
Kingfisher Plc led retailers lower, sliding 2.7 percent. Man Group Plc fell 5.7 percent after MSCI Inc. removed the company from its U.K. equities gauge. John Wood Group Plc lost 5.9 percent after it missed out on inclusion in the measure. Resolution Ltd. tumbled the most in more than two months as sales at its international division dropped.
The FTSE 100 retreated 44.26 points, or 0.8 percent, to 5,677.75 at the close of trading in London, its lowest level since Sept. 5. The benchmark has fallen 3.5 percent since President Barack Obama’s re-election on Nov. 6 amid concern that impending tax increases and spending cuts will push the U.S. economy into recession. The FTSE All-Share Index slid 0.7 percent today, while Ireland’s ISEQ Index decreased 1.2 percent.
“Retail sales were weaker than expected and, to our minds, that leads the way to further downgrades to the economic-growth outlook for the U.K.,” Gerard Lane, a strategist at Shore Capital Group Ltd., an investment bank and stockbroker in Liverpool, England, said by phone. “With a worsening economic backdrop and earnings at risk of falling quite sharply in the new year, even if we don’t get a fiscal-cliff recession, I think the markets remain on a bear tack.”
In the U.S., Obama said voters want to cut the budget deficit through a combination of tax increases for the wealthy and reductions in spending.
The president opened a White House news conference yesterday reiterating his call for Congress to immediately pass an extension of the Bush-era tax cuts for the first $200,000 of annual income for individuals and $250,000 for married couples. He said the rates on earnings above those levels should be allowed to rise when they expire at the end of the year.
U.K. retail sales fell more than economists forecast in October. Sales including fuel dropped 0.8 percent from September, when they gained a revised 0.5 percent, the Office for National Statistics said today in London. The median forecast of 23 economists in a Bloomberg News survey was for a 0.1 percent decline.
The euro-area economy slipped into a recession for the second time in four years as governments imposed tougher budget cuts amid the worsening debt crisis. Gross domestic product slipped 0.1 percent in the third quarter after a 0.2 percent decline in the previous three months, the European Union’s statistics office said.
More Americans than forecast submitted claims for unemployment insurance last week. Applications for jobless benefits surged by 78,000 to 439,000 in the week ended Nov. 10, the most since April 2011, the Labor Department said.
Retailers retreated, with Kingfisher, the U.K. owner of the B&Q home-improvement chain, sliding 2.7 percent to 275.4 pence. Marks & Spencer Group Plc lost 2.1 percent to 370.6 pence and J Sainsbury Plc, the U.K.’s third-largest supermarket company, dropped 1.7 percent to 333 pence.
Man Group dropped 5.7 percent to 73.75 pence, a two-month low. The world’s biggest publicly traded hedge-fund manager was removed from the MSCI U.K. Index, meaning funds that track the measure will have to sell the stock.
Wood Group fell 5.9 percent to 790.5 pence. The oil services provider active in Africa and the Middle East was seen as a likely addition to the gauge and “may suffer from the quick unwinding of speculative positions,” according to a note from Exane BNP Paribas.
Resolution sank 4 percent to 230 pence, the largest decline since Sept. 5. The insurance buyout firm founded by Clive Cowdery said international sales dropped 18 percent to 272 million pounds ($431 million) in the first nine months of the year. Resolution will spend 35 million pounds to integrate computer systems after buying Axa SA’s U.K. life insurance unit.
Pennon Group Plc tumbled 6.2 percent to 628.5 pence, its biggest drop in four years. The U.K. water supply and waste management business said in a trading statement that recyclate price remain under pressure and will affect the performance of its Viridor unit.
Invensys Plc, which makes software that runs the London Underground trains, rose 2.6 percent to 221.7 pence. The company predicted an improved performance for the full year after reporting a 15 percent increase in first-half profit to 62 million pounds.
Amlin Plc added 1.8 percent to 373.5 pence. The second-biggest Lloyd’s of London insurer by market value said revenue rose 11 percent and it’s “well placed” to absorb claims from Hurricane Sandy.
Keller Group Plc surged 9.9 percent to 623 pence, its biggest gain since Jan. 19. The builder of the foundation for the main London 2012 Olympic Games stadium forecast earnings before interest, taxes, depreciation and amortization for 2012 of 85.8 million pounds and said full-year revenue would be in line with expectations at 1.3 billion pounds.
WS Atkins Plc soared 11 percent to 710 pence, the biggest gain in four years. The U.K.’s largest engineering-design company reported first-half revenue of 815.7 million pounds and reiterated its full-year outlook.
CPP Group Plc, the U.K. company that provides protection against credit-card and identity theft, advanced 4.1 percent to 25.25 pence, trimming this year’s drop to 77 percent.
CPP said it will be able to pay a settlement of as much as 33.4 million pounds in installments after a Financial Services Authority inquiry into sales of its two main products. The FSA said the York, England-based company settled at an early stage and qualified for a 30 percent discount on the fine.