U.K. stocks fell from a 4 1/2 year high, as British business confidence declined in December, outweighing a U.S. central banker’s recommendation of continued stimulus to support the country’s economy.
Sage Group Plc lost 1.2 percent after Barclays Plc recommended that investors sell the shares. Lloyds Banking Group Plc gained 1.6 percent after a report that its chief executive officer beat targets tied to a turnaround plan. Petrofac Ltd. climbed 1.1 percent after Middle East Economic Digest said the company made the lowest bid for a contract in Abu Dhabi.
The FTSE 100 dropped 13.72 points, or 0.2 percent, to 6,107.86 at the close in London. The equity benchmark rose to its highest level since May 2008 last week amid optimism that U.S. companies’ earnings would exceed analysts’ estimates. The broader FTSE All-Share Index also lost 0.2 percent today, while Ireland’s ISEQ Index decreased 0.4 percent.
“After such a good run in global equities, one would expect a correction at some point before markets go higher once again,” said Richard Scrope, who helps manage 100 million pounds ($161 million) as fund manager at Oriel Asset Management LLP in London. “The U.K. economy is in poor shape and without some growth, it’s likely to struggle.”
The volume of shares changing hands in FTSE 100 companies was 12 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
An index of business confidence in the U.K. fell to 90.3 in December from 91.4 in November, accounting firm BDO LLP said in a report in London. A gauge of output dropped to 93.1 from a reading of 93.4, below the 95 mark that signals positive growth in the quarter ahead.
“The U.K. may experience further contraction in the first quarter of 2013, potentially resulting in a triple-dip recession,” BDO said.
The U.S. government should put “in place policies that slowly but surely bring the prospects of future revenues into balance with future spending,” Federal Reserve Bank of Chicago President Charles Evans said at the Asian Financial Forum in Hong Kong today. “Under this scenario, monetary policy has an important contribution to make.”
Sage Group slid 1.2 percent to 310 pence after Barclays lowered its recommendation on the shares to underweight, the equivalent of sell, from equal weight. The company has taken too long to develop cloud-based applications, analysts led by Gerardus Vos wrote in a note today.
Imagination Technologies Group Plc slumped 6.4 percent to 435.3 pence after Goldman Sachs Group Inc. said Samsung Electronics Co. has used a competitor’s technology in its new range of smartphones.
“Anecdotal evidence suggests that Samsung Electronics’ next-generation smartphone chip contains plenty of intellectual property from ARM Holdings,” analyst Simon Schafer wrote in a note dated Jan. 12. “This removes upside potential to our market-share forecasts.”
Lloyds advanced 1.6 percent to 54.9 pence after the Sunday Times reported that CEO Antonio Horta-Osorio may get a 4.4 million-pound bonus because he beat targets tied to the company’s strategy and customer complaints. A Lloyds spokesman declined to comment. The shares surged 85 percent last year, their biggest annual gain since at least 1989.
Petrofac gained 1.1 percent to 1,696 pence. A group of companies including Petrofac submitted the lowest bid for a contract to develop an oil field off the coast of Abu Dhabi for Zakum Development Co., MEED reported on its website citing unidentified people close to the process.
ITV Plc added 1.6 percent to 111.7 pence after the Telegraph reported that the company may return cash to shareholders when it publishes its annual results in February. The newspaper didn’t say where it got the information.
Eurasian Natural Resources Corp. rose 3.5 percent to 334 pence after Credit Suisse Group AG upgraded the shares to outperform, the equivalent of buy, from neutral, saying that the company’s outlook for 2013-14 has improved.