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U.K. Stocks Drop for a Third Day as ARM, Burberry Decline

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April 16 (Bloomberg) -- U.K. stocks retreated for a third day, following the biggest selloff in U.S. equities in five months, as a report showed that investor confidence fell short of economists’ forecasts in Germany.

ARM Holdings Plc lost 3.2 percent, for the second-biggest drop on the FTSE 100 Index. Burberry Group Plc slid 1.4 percent as French rival LVMH Moet Hennessy Louis Vuitton SA reported slowing sales. Mining companies climbed with metal prices.

The benchmark FTSE 100 dropped 39.02 points, or 0.6 percent, to 6,304.58 at the close of trading in London. The gauge declined yesterday after a report showed China’s economy grew at a slower pace than forecast. The broader FTSE All-Share Index also fell 0.6 percent today, while Ireland’s ISEQ Index lost 0.5 percent.

“Investors are in capital-preservation mode, particularly after the gains we have seen in Q1,” said Ian Williams, a market strategist at Peel Hunt LLP in London. “Macro news has flattened out and we are are still getting the occasional profit warning which is capping the enthusiasm.”

U.K. stocks rallied 8.7 percent in the first three months of this year, their best start to a year since 1998. The volume of shares changing hands in FTSE 100-listed companies today was 17 percent lower than the average of the past 30 days, data compiled by Bloomberg show.

The FTSE 100 earlier fell as much as 0.7 percent after U.S. stocks slumped yesterday as commodities tumbled and as bombs killed three people near the finish line of the Boston Marathon.

German Confidence

Stocks declined as a report showed investor confidence in Europe’s largest economy retreated more than forecast, suggesting the recovery will struggle to gain momentum. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, dropped to 36.3 in April from an almost three-year high of 48.5 in March. Economists had predicted a decline to 41.

A release in the U.K. showed inflation remained unchanged for Europe’s third-biggest economy at 2.8 percent in March. Consumer prices have climbed at a faster pace than the Bank of England’s 2 percent target every month since December 2009.

ARM Holdings lost 3.2 percent to 868 pence. Liberum Capital Ltd. reiterated its sell recommendation on the stock before the designer of chips for Apple Inc. reports earnings next week. Analysts predicted that revenue growth will slow from a year earlier as smartphone growth moderates. They also cited concern that Intel Corp. will take market share.

Burberry Slides

Burberry, the largest U.K. luxury-goods company, slid 1.4 percent to 1,266 pence. The shares earlier dropped as much as 3.6 percent after LVMH reported the slowest growth in sales of fashion and leather goods in more than three years.

Associated British Foods Plc lost 1.8 percent to 1,830 pence after Credit Suisse Group AG downgraded the owner of the Primark discount clothing chain to neutral from outperform. The brokerage said European sugar prices will grow more slowly. The bank’s price estimate of 1,850 pence implies a 0.8 percent discount to yesterday’s close.

A gauge of mining stocks rebounded from its biggest three-day selloff since June as copper led metals higher in London. Eurasian Natural Resources Corp. gained 3.7 percent to 246.8 pence, Kazakhmys Plc advanced 1.4 percent to 345.7 pence and Vedanta Resources Plc added 1.5 percent to 1,123 pence.

Xstrata Plc jumped 2 percent to 986 pence and Glencore International Plc rose 1.3 percent to 325.1 pence after China’s Ministry of Commerce approved Glencore’s $30 billion takeover of Xstrata, the deal’s final regulatory hurdle.

The transaction won agreement from South Africa’s antitrust regulator in January and the European Union in November.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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