U.K. stocks retreated, sending the FTSE 100 Index lower for a second day, after the euro area forced Cyprus to adopt an unprecedented levy on bank deposits, threatening to reignite the region’s debt crisis.
Barclays Plc and Prudential Plc led a selloff in financial firms, both falling more than 3 percent. Eurasian Natural Resources Corp. lost 7.2 percent as base metals declined and a newspaper said the company may write down more than $1 billion this week. Marks & Spencer Group Plc paced advancing shares.
The FTSE 100 lost 31.73 points, or 0.5 percent, to 6,457.92 at the close in London for its first back to back loss since January. The gauge earlier lost as much as 1.6 percent. The FTSE 100 is still up 9.5 percent so far this year. The broader FTSE All-Share Index also lost 0.5 percent today. Ireland’s ISEQ Index climbed 1.4 percent.
“The question that everyone is now going to ask themselves is ‘who is next?’” Andy Lynch, who helps manage about $1.6 billion as portfolio manager at Schroder Investment Management Ltd. said on Bloomberg Television in London. “If we start seeing deposits moving out from the periphery, then banks can get themselves in a situation very quickly again where they are dependent on emergency liquidity.”
The volume of shares changing hands in companies on the FTSE 100 was 5.9 percent higher than the average of the past 30 days, data compiled by Bloomberg showed.
Euro-area finance ministers reached an agreement on March 16 that forces depositors in Cypriot banks to share the cost of the latest euro-zone bailout. Cypriot President Nicos Anastasiades, who bowed to demands to raise 5.8 billion euros ($7.6 billion) by taking a piece of every bank account in Cyprus, appealed to lawmakers to ratify the levy.
The vote has been delayed for a second day amid opposition in Cyprus to the proposal. Moody’s Investors Service said today the levy is negative for bank depositors across Europe, while Bill Gross at Pacific Investment Management Co. said it moves “risk-on” trades to the back seat.
“The bailout will have to change,” Lynch told Caroline Hyde on Bloomberg Television. “When they look at it in the cold light of day, they will say yes we got that one wrong. They have got time before parliament today to make adjustments.”
Barclays led a gauge of U.K. banks lower, losing 4.4 percent to 305.95 pence. Royal Bank of Scotland Group Plc slid 3.4 percent to 297.3 pence and Lloyds Banking Group Plc dropped 1.3 percent to 49.85 pence.
Prudential paced declines among insurance companies, falling 3.4 percent to 1,115 pence. Aviva Plc retreated 0.9 percent to 323.3 pence and Legal & General Group Plc slipped 0.5 percent to 172.4 pence.
Legal & General also today entered a joint venture to acquire Scottish homebuilder Cala Group Ltd. from Lloyds for 210 million pounds ($317 million).
ENRC tumbled 7.2 percent to 321.9 pence, the biggest decline in seven months. The company may announce a writedown on operations this week, the Independent on Sunday reported, citing figures from Deutsche Bank AG. The German lender expects ENRC to announce writedowns of between $550 million to $1.05 billion, according to the newspaper.
Kazakhmys fell 6.1 percent to 505.5 pence as copper declined to a four-month low on the London Metal Exchange. Antofagasta Plc slid 1.5 percent to 1,066 pence and Xstrata Plc dropped 2.5 percent to 1,135.5 pence.
Elsewhere, Marks & Spencer surged 6.9 percent to 398.1 pence, for the biggest advance on the FTSE 100 today, after the Sunday Times yesterday reported the Qatar Investment Authority may make an 8 billion-pound offer for the retailer.
The newspaper said that QIA had approached banks and private equity houses to help make a move on the London-based company, citing senior sources in London’s financial district.
Even so, a person close to the wealth fund today said QIA is not considering a bid for M&S. The retailer declined to comment.
Torotrak Plc surged 20 percent to 28.75 pence, the biggest advance on the FTSE All-Share Index, after Allison Transmission Holdings Inc., a former General Motors Co. unit, agreed to renew a license and increase its stake in the maker of transmission systems.
Lamprell Plc declined 2.2 percent to 144.5 pence after the U.K.’s Financial Services Authority fined the oil-rig manufacturer 2.4 million pounds for not telling investors quickly enough about its faltering finances in early 2012. The stock had climbed 7 percent the past four sessions.