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U.K. Stocks Decline a Second Day as Marks & Spencer Falls

Oct. 8 (Bloomberg) -- U.K. stocks declined to a three-month low as investors monitored the start of the earnings-reporting season for American companies and negotiations over how to avoid a default by the U.S. government.

Marks & Spencer Group Plc dropped 3.4 percent as a gauge of retail sales grew at a slower-than-expected rate in September. ITV Plc rose for a fourth day as Exane BNP Paribas recommended buying shares in Britain’s largest terrestrial broadcaster.

The FTSE 100 Index retreated 71.45 points, or 1.1 percent, to 6,365.83 at the close in London. The equity benchmark has decreased 3.9 percent from a high on Sept. 19 as the U.S. government shut down. The broader FTSE All-Share Index slid 1 percent today, while Ireland’s ISEQ Index fell 1.1 percent.

“We are noticing some brokers have started to revise their gross domestic product forecasts,” Colin McLean, who helps oversee about $970 million as managing director at SVM Asset Management Ltd. in Edinburgh, said in a phone interview. “Investors feel this issue will be resolved again, but nonetheless it will start to slow growth a bit.”

President Barack Obama yesterday reiterated that he won’t negotiate with Republicans over conditions tied to the budget for the new financial year, which started on Oct. 1. He also said he will not discuss concessions to increase the country’s borrowing authority before it breaches the $16.7 trillion debt ceiling in nine days. Senate Majority Leader Harry Reid yesterday called for a House vote on a funding plan to reopen the government without setting preconditions.

Debt Ceiling

The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Equity benchmarks extended their losses today after the International Monetary Fund lowered its global outlook for this year. The fund warned that a U.S. government default would damage the global economy.

In the U.K., factories reported increased domestic and export demand in the third quarter, according to the British Chambers of Commerce. They also expect to accelerate hiring in the next three months.

A British house-price index rose to its highest level in more than a decade last month, the Royal Institution of Chartered Surveyors said, as the government’s Help to Buy program to stimulate house buying lifted the outlook for sales.

Alcoa Inc. will unofficially start the quarterly reporting season in the U.S. when it releases earnings after the close of European trading today. JPMorgan Chase & Co. and Wells Fargo & Co. both publish their financial results on Friday.

Marks & Spencer

Marks & Spencer, Britain’s largest clothing retailer, declined 3.4 percent to 463.8 pence, extending its loss in the last three trading days to 7.1 percent. Next Plc, the second biggest, dropped 1.5 percent to 4,955 pence. Home Retail Group Plc, which owns Argos, decreased 1.9 percent to 168.1 pence.

The British Retail Consortium and KPMG said total same-store sales rose 0.7 percent in September from a year earlier. That missed the average economist forecast in a Bloomberg survey for growth of 2 percent.

ITV climbed 1 percent to 183.6 pence. Exane advised investors to buy the shares following a presentation from the broadcaster’s Chief Financial Officer Ian Griffiths.

Ocado Group Plc jumped 5.1 percent to 450.5 pence. Goldman Sachs Group Inc. rated Britain’s largest Internet-only grocer as a buy, saying the stock may reach 545 pence in two years. The brokerage predicted that Ocado’s joint venture with WM Morrison Supermarkets Plc will enable it to report net cash of 74 million pounds ($119 million) at the end of this financial year, compared with net debt of 55 million pounds a year earlier.

The volume of shares changing hands in FTSE 100-listed companies today was 6.8 percent lower than the daily average in the past 30 days, according to data compiled by Bloomberg.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

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

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