FTSE 100 Drops for a Third Day Amid U.S. Budget Concern

U.K. stocks retreated for a third day, their longest losing streak in a month, as Vodafone Group Plc declined and concern mounted that U.S. lawmakers will fail to agree on a budget before the holiday.

Vodafone dropped 1.7 percent after paying 1.4 billion euros ($1.8 billion) for frequency at a Dutch spectrum auction. Aggreko Plc plunged 22 percent, its biggest slide in more than a decade, after the company said profit will probably fall in 2013. Centamin Plc surged 22 percent after saying it has resumed exports of gold from Egypt.

The FTSE 100 retreated 9.61 points, or 0.2 percent, to 5,912.15 at the close in London. The equity benchmark has still rallied 6.1 percent this year as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases. The broader FTSE All-Share Index also fell 0.2 percent today, while Ireland’s ISEQ Index slipped 0.5 percent.

“Telecoms today are an easy target to penalize as the spectrum licenses in the Netherlands were priced a lot higher than people anticipated,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about 4.4 billion pounds ($7.1 billion). “You’ve got the likes of the U.K. auctioning their licenses next year; the thought is maybe they’ll go for a similarly aggressive-type approach to the Dutch,” he said in a phone interview.

U.S. Manufacturing

In the U.S., the Federal Reserve Bank of New York’s gauge of manufacturing in the New York region contracted in December more than economists had forecast. The index dropped to minus 8.1 from minus 5.2 in November. Economists had predicted the measure would climb to minus 1, according to a Bloomberg survey.

U.S. lawmakers continue to discuss a budget deal to avoid the so-called fiscal cliff, the more than $600 billion in automatic tax increases and spending cuts due to take effect next year.

In Japan, Shinzo Abe’s Liberal Democratic Party reclaimed power in a landslide victory after pledging to achieve nominal economic growth of 3 percent with an inflation target of 2 percent. The LDP yesterday won 294 seats in the 480-member lower house of parliament, according to public broadcaster NHK. Prime Minister Yoshihiko Noda’s Democratic Party of Japan lost three-quarters of its lawmakers.

Vodafone declined 1.7 percent to 158.2 pence after the world’s second-largest mobile-phone operator won spectrum in an auction in the Netherlands.

Aggreko Plummets

Aggreko plunged 22 percent to 1,664 pence, its biggest tumble since June 2002. The world’s largest provider of mobile-power supplies also said net debt may rise by 250 million pounds to about 620 million pounds at the end of 2012.

AZ Electronic Materials SA lost 2.9 percent to 344.2 pence after Numis Securities Ltd. cut its recommendation on the shares to hold from buy, meaning investors should no longer buy the stock. The supplier of chemicals used in devices such as Apple Inc.’s iPad has still rallied 43 percent this year.

Hunting Plc dropped 6 percent to 757.5 pence, falling for a fifth day. Analysts at Investec Plc, JPMorgan Chase & Co., Deutsche Bank AG and Barclays Plc all cut their earnings forecasts after the U.K. oil-services company said it has become more cautious on its short-term trading outlook.

Imagination Technologies Group Plc retreated 6.3 percent to 383.5 pence, its lowest price in 15 months. The maker of chip technology for tablet computers and smart phones agreed to acquire MIPS Technologies Inc.’s assets for $100 million, increasing its $80 million offer after Ceva Inc. bid $90 million for the operations on Dec. 11.

Centamin Jumps

Centamin surged 22 percent to 42.1 pence, completing the biggest two-day rally since its initial public offering in 2001, after the gold producer said that exports from its Sukari mine in Egypt have resumed. Centamin said production will restart within the next few days.

Fortune Oil Plc soared 18 percent to 10.75 pence, its biggest jump in almost two years, after the Hong Kong-based company said China Gas Holdings Ltd. will buy its Chinese natural-gas operations for $400 million.

The volume of shares changing hands on FTSE 100 companies was 12 percent lower than the 30-day average, according to data compiled by Bloomberg.

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