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U.K. Stocks Fall as U.S. Growth Fuels Taper Speculation

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Nov. 7 (Bloomberg) -- U.K. stocks fell to a two-week low as data showing the U.S. economy grew faster than forecast fueled bets the Federal Reserve will taper stimulus, while the European Central Bank unexpectedly cut its benchmark interest rate.

Schroders Plc lost 4.4 percent as Canaccord Genuity Ltd. cut its rating on the money manager after it reported third-quarter results. Travis Perkins Plc declined 2.5 percent after UBS AG offered shares in the builders’ merchant. Randgold Resources Ltd. rallied 6.1 percent after reporting quarterly profit that beat analysts’ estimates.

The FTSE 100 Index lost 44.47 points, or 0.7 percent, to 6,697.22 at the close in London, the lowest level since Oct. 23. The gauge earlier rallied as much as 0.6 percent as the ECB trimmed its key interest rate by a quarter point to 0.25 percent. The broader FTSE All-Share Index slipped 0.6 percent today, while Ireland’s ISEQ Index was almost unchanged.

“The uncertainty of the coming Fed tapering has increased market noise surrounding economic releases,” Lena Komileva, the London-based chief economist at G+ Economics Ltd., said by telephone. “Stronger headline GDP and the decline in jobless boosted market expectations about the date of Fed tapering happening sooner.”

In the U.S., gross domestic product rose at a 2.8 percent annualized rate in the third quarter after a 2.5 percent gain the prior three months, a Commerce Department report showed. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. A separate release showed fewer Americans filed applications for unemployment benefits last week.

Fed Taper

Economists surveyed by Bloomberg Oct. 17-18 predicted the Fed would wait until March to begin trimming its monthly bond purchases of $85 billion.

The ECB cut its benchmark interest rate after a drop in inflation to the slowest pace in four years threatened its mandate to keep prices stable. The Bank of England kept its key rate and its asset-purchase target unchanged.

“It shows the ECB is prepared to act and will act,” Oliver Wallin, who helps oversee $5.6 billion as investment director at Octopus Investments Ltd. in London, said by telephone. “They have more ammunition because they haven’t been printing to the scale of the U.S. or Japan.”

The volume of shares changing hands in FTSE 100-listed companies was 11 percent greater than the 30-day average, according to data compiled by Bloomberg.

Schroders Sinks

Schroders lost 4.4 percent to 2,491 pence as Canaccord Genuity cut its rating on the money manager to hold from buy. The company had assets under management of 256.7 billion pounds ($413 billion) on Sept. 30, missing estimates, Royal Bank of Canada analyst Peter Lenardos wrote in note.

Travis Perkins declined 2.5 percent to 1,759 pence. UBS offered shares in the company at 1,755 pence each on behalf of an unidentified investor, according to terms obtained by Bloomberg News.

Inmarsat Plc slid 2.7 percent to 695 pence. The largest provider of maritime-satellite services reported third-quarter sales that missed analysts’ estimates and said 2014 will be a year of transition, in which a difficult outlook for U.S. government business will hurt operating profits.

Randgold rallied 6.1 percent to 4,885 pence, the highest price in almost two months. The gold miner reported third-quarter adjusted earnings of 88 cents a share, topping the 67-cent estimate of analysts on average.

Halfords Group Plc surged 14 percent to 478 pence, its biggest gain since its initial public offering in June 2004 and the highest price in three years. The car-repair and bicycle-parts retail chain reported first-half revenue and adjusted pretax profit that beat forecasts.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

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

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