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U.K. Stocks Are Little Changed; Serco Rallies on Contract

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July 2 (Bloomberg) -- U.K. stocks were little changed, after the FTSE 100 Index gained the most in a month, as data showed British construction activity in June trailed estimates and U.S. factory orders rose more than forecast in May.

EasyJet Plc and International Consolidated Airlines Group Plc followed European travel stocks lower. Serco Group Plc jumped to the highest price in more than 12 years after winning a healthcare contract in the U.S. Burberry Group Plc advanced 2.9 percent after HSBC Holdings Plc raised its recommendation on the shares.

The FTSE 100 Index fell 3.84 points, or 0.1 percent, to 6,303.94 at the close in London. The equity benchmark gained 1.5 percent yesterday, the most since May 28, as a measure of British manufacturing beat estimates. The FTSE 100 slid 5.6 percent in June, paring its gains this year to 6.9 percent. The FTSE All-Share Index and Ireland’s ISEQ Index also declined 0.1 percent today.

“After the losses of last month, and the rally before that, investors are unsure which direction equities will go,” Guy Foster, the London-based head of portfolio strategy at Brewin Dolphin Securities Ltd., which oversees about $39 billion. “The U.K. economy has been stronger, so investors went in expecting construction data to beat estimates.”

A purchasing managers’ index of U.K. construction activity climbed to 51 in June, from 50.8 in May, a report by London-based Markit Economics showed. The median estimate of economists surveyed by Bloomberg News was for 51.2.

U.S. Orders

In the U.S., a Commerce Department report showed that factory orders in the world’s biggest economy rose 2.1 percent in May, from a revised 1.3 percent in April. Economists in a Bloomberg survey had forecast a gain of 2 percent last month.

IAG, owner of British Airways, dropped 1.1 percent to 267.3 pence. EasyJet, Europe’s second-biggest discount carrier, lost 1.2 percent to 1,331 pence.

Balfour Beatty Plc, the U.K.’s largest builder, retreated 3.8 percent to 221.3 pence, the biggest drop since June 5.

Ashmore Group Plc slid 2.9 percent to 330.9 pence and Aberdeen Asset Management Plc fell 2.4 percent to 382.4 pence. Goldman Sachs Group Inc. listed the two companies among asset managers most vulnerable to weakness in emerging markets.

Serco surged 6.5 percent to 665.5 pence, the highest price since October 2000, after the U.K. services company won a contract worth as much as $1.25 billion for support tasks for U.S. Medicare and Medicaid Services.

Burberry added 2.9 percent to 1,405 pence as HSBC upgraded the shares to overweight, similar to a buy rating, from neutral, citing an improved ability to predict growth at a time when it no longer trades at a premium to its peers.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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