U.K. stocks declined to their lowest level in six weeks as investors’ concern grew that the Federal Reserve will reduce its stimulus measures as early as September.
BHP Billiton Ltd. and Anglo American Plc contributed the most to a retreat in mining shares. Tesco Plc dropped the most in almost 17 months after reporting same-store sales that missed analysts’ estimates. Man Group Plc tumbled the most in 20 months after UBS AG lowered its recommendation on the shares.
The FTSE 100 Index fell 139.27 points, or 2.1 percent, to 6,419.31 at the close in London, the lowest level since April 23. The equity benchmark has lost 6.2 percent since Fed Chairman Ben S. Bernanke said May 22 the central bank may scale back stimulus if the U.S. economy improves. The broader FTSE All-Share Index also slid 2.1 percent today, while Ireland’s ISEQ Index slipped 1.1 percent.
“What we’re seeing is a lot of short-term traders repositioning themselves in fear of the unknown,” John Haynes, head of research at Investec Wealth & Investment in London, said in a phone interview. “The tapering option is very much available to the Fed and it will only do so if the economy improves, which in the long term is a good thing. Eventually, we’ll concentrate on fundamentals.”
Four FTSE 100 companies including National Grid Plc and WPP Plc are trading without the right to their latest dividends today, shaving off 4.9 points from the FTSE 100.
Fed Bank of Dallas President Richard Fisher, who opposed the beginning of the current round of bond-buying in September as well as the expansion of the program to Treasuries in December, reiterated his backing for reducing stimulus.
Separately, Fed Bank of Kansas City President Esther George supported slowing purchases “as an appropriate next step for monetary policy,” according to the text of a speech. She didn’t deliver the speech due to illness.
The central bank’s policy makers will start tapering quantitative easing in September, Deutsche Bank AG said in a report yesterday.
Companies in the U.S. increased employment by 135,000 workers in May, figures from the Roseland, New Jersey-based ADP Research Institute showed. The median forecast of 40 economists surveyed by Bloomberg called for an advance of 165,000.
A gauge of mining shares in the FTSE 350 Index retreated 2.7 percent, its lowest level since April 22. BHP Billiton, the world’s biggest commodity producer, slid 2.7 percent to 1,843 pence. Anglo American Plc dropped 4.3 percent to 1,454 pence.
Tesco tumbled 5.2 percent to 345.6 pence, the most since Jan. 12, 2012. Britain’s biggest retailer said today U.K. same-store sales, excluding gasoline and value-added tax, fell 1 percent in the 13 weeks ended May 25. The decrease was more than the 0.7 percent drop forecast by analysts in a Bloomberg survey.
A gauge of retailers in the FTSE 350 lost 3.1 percent, its biggest slump in more than four months. J Sainsbury Plc slipped 1.8 percent to 365.1 pence, while Marks & Spencer Group Plc declined 2.8 percent to 453.4 pence. Wm Morrison Supermarkets Plc slipped 3.5 percent to 262.8 pence.
Man Group plunged 17 percent to 97.05 pence, its largest retreat since September 2011. UBS AG lowered its rating on the world’s biggest publicly traded hedge-fund manager to neutral from buy, citing weak performance at its $16.3 billion AHL fund.