U.K. stocks dropped for a second day as investors awaited the start of the U.S. earnings season and concern mounted that the recent rally by shares has overshot the outlook for corporate profit.
African Barrick Gold Plc plunged the most on record after its biggest shareholder stopped talks to sell the business to China National Gold Group Corp. Vodafone Group Plc rose 1.7 percent after a report that Verizon Communications Inc. may buy the U.K. operator’s stake in Verizon Wireless. Anglo American Plc added 1.4 percent after the mining company appointed a new chief executive officer.
The FTSE 100 Index lost 10.95 points, or 0.2 percent, to 6,053.63 at the close in London, erasing an earlier gain of as much as 0.4 percent. The gauge jumped 2.8 percent last week, reaching its highest level since February 2011, as the U.S. Congress agreed on a compromise budget, avoiding automatic deficit-reduction measures. The broader FTSE All-Share Index fell 0.3 percent, while Ireland’s ISEQ Index added 0.2 percent.
“Macro risks are quite significant, and there are big divergences in performances, so this is not a very good moment,” said Roberto Magnatantini, who helps manage 27 billion Swiss francs ($29 billion) at Banque SYZ & Co. SA in Geneva. “I am a little more prudent now than I was two or three months ago, while not being overall defensive. We’ve had that classical climbing over the wall of worries behavior in the market, but I think now we will have some correction with the realities.”
FTSE 100 companies are trading at 15.6 times reported earnings, their highest valuation since December 2010, according to data compiled by Bloomberg.
In Germany, exports declined in November more than economists had forecast. Exports adjusted for working days and seasonal changes fell 3.4 percent from October, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 0.5 percent drop, according to the median of nine estimates in a Bloomberg News survey.
African Barrick Gold plunged 21 percent to 352.1 pence, the biggest decline since the company’s initial public offering in March 2010. Barrick Gold Corp., the world’s biggest producer of the precious metal, ended talks to sell its African unit to the Chinese state-owned enterprise.
TUI Travel Plc dropped 3.4 percent to 276.8 pence as Morgan Stanley cut its recommendation on the stock to underweight, the equivalent of sell, from equal weight. The company’s free cash flow relative to its earnings per share will remain weak this year, analysts led by Jamie Rollo wrote in a note.
Michael Page International Plc and Hays Plc slid 3.8 percent to 398.8 pence and 1.5 percent to 84.55 pence, respectively. The U.K. recruitment companies retreated as smaller rival Robert Walters Plc said the market remains challenging and may not improve in 2013.
Debenhams Plc fell 7.7 percent to 108.1 pence, its largest slump in almost four years. The U.K.’s second-largest department-store chain cut its forecast for full-year margin growth after increasing promotions to attract shoppers.
Vodafone advanced 1.7 percent to 162.4 pence, the highest price in three weeks. Verizon Chief Executive Officer Lowell McAdam told the Wall Street Journal that it may buy Vodafone’s holding in the joint venture. The world’s second-largest mobile-phone operator owns 45 percent of Verizon Wireless.
Anglo American rose 1.4 percent to 2,028 pence after appointing Mark Cutifani to replace Cynthia Carroll as chief executive officer of the world’s largest platinum producer from April 3. The shares plunged 20 percent in 2012.
Cutifani resigned as CEO of AngloGold Ashanti Ltd., the Johannesburg-based company said today in a statement.
Alcoa Inc. unofficially kicks off the U.S. earnings season today when the aluminum producer publishes its quarterly results after the market closes.
The number of shares changing hands in FTSE 100 companies today was 29 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.