U.K. stocks retreated as a report showed growth in China’s services industries slowed last month, and lawmakers tightened mortgage rules to cool the residential property market in the world’s second-largest economy.
HSBC Holdings Plc slid the most in seven months as it posted 2012 profit that missed analyst estimates. Debenhams Plc dropped the most since November 2008 after saying first-half profit will decline because snowfall in January disrupted sales. GKN Plc rose to the highest level since July 2007 after Goldman Sachs Group Inc. raised its recommendation on the shares.
The FTSE 100 Index lost 32.97 points, or 0.5 percent, to 6,345.63 at the close in London. The gauge has still rallied 7.6 percent so far this year as U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index also fell 0.5 percent today, while Ireland’s ISEQ Index added 1.3 percent.
“With China, we’ve had very strong credit growth and we’re a little bit concerned that we’re starting to see some tightening,” Nick Nelson, a strategist at UBS AG in London, told Francine Lacqua on Bloomberg Television. “On Friday, we got a description of some tightening around the property market, which may be the beginning of that process.”
China’s services industries expanded last month at the slowest pace since September. The non-manufacturing Purchasing Managers’ Index fell to 54.5 in February from 56.2 in January, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. A reading above 50 indicates expansion.
The Chinese government has also intensified its three-year campaign to cool the real estate market, ordering larger deposits and stricter enforcement of sales taxes.
In Italy, Democratic Party Leader Pier Luigi Bersani, whose coalition won the most votes in inconclusive polls, rejected the possibility of forming a government with rival Silvio Berlusconi and said he hadn’t met with politician Beppe Grillo.
Bersani’s economic policy spokesman, Stefano Fassina, said the country may have to hold new elections “in a few months” if Bersani doesn’t get a majority in parliament.
The volume of shares changing hands on FTSE 100-listed companies was 8.2 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
HSBC dropped 2.5 percent to 710 pence, the most since July 23. Europe’s largest bank by market value said profit fell 5.6 percent after a record settlement for anti-money-laundering sanctions in the U.S. and a charge to revalue its own debt. Pretax earnings for 2012 slid to $20.65 billion, trailing the $23.49 billion estimate of 26 analysts surveyed by Bloomberg.
A gauge of U.K.-listed banking shares declined 2 percent. Lloyds Banking Group Plc retreated 3.7 percent to 51.3 pence and Royal Bank of Scotland Group Plc slipped 2.3 percent to 306.9 pence.
Debenhams declined 15 percent to 80.7 pence. The U.K.’s second-largest department-store company indicated that first-half profit will miss estimates. Pretax profit will fall to about 120 million pounds ($180 million) from 127.1 million pounds a year earlier, it said in a statement. Cantor Fitzgerald analysts had estimated earnings of 131 million pounds.
GKN Plc climbed 2.4 percent to 275.9 pence after Goldman Sachs raised its recommendation on the shares to neutral from sell, citing better growth prospects and lower volatility of returns in the aerospace division.
Bunzl Plc advanced 1.9 percent to 1,310 pence, the highest level since at least 1988, after it bought Brazilian health-care supplier Labor Import Comercial Importadora Exportadora Ltda. for an undisclosed amount.