U.K. stocks fell, with the FTSE 100 Index completing its biggest monthly loss since June, as investors bet that a decline by emerging-market currencies will hurt European companies’ sales.
Vedanta Resources Plc dropped 3.6 percent after saying copper output from its mines in India, Australia and Zambia slid in the final three months of 2013. Diageo Plc posted its worst two days since August 2011 as Goldman Sachs Group Inc. downgraded the distiller. Imperial Tobacco Group Plc added 1.9 percent as the brokerage recommended that investors buy the shares. BT Group Plc rose the most in almost five months.
The FTSE 100 lost 28.01 points, or 0.4 percent, to 6,510.44 at the close in London. The equity benchmark has fallen 3.5 percent this month, slumping 4.6 percent since Jan. 22 as the Argentinian government’s decision to allow the peso to devalue triggered a rout in emerging-market currencies. The broader FTSE All-Share Index also retreated 0.4 percent today, while Ireland’s ISEQ Index decreased 0.7 percent.
“The focus on emerging markets has increased,” Goldman Sachs strategists including Caesar Maasry and Peter Oppenheimer wrote in a note today. “Emerging-market industrial- and commodity-exposed companies are at risk.”
An index of 20 emerging-market currencies compiled by Bloomberg, including the Brazilian real, the Russian ruble and the Turkish lira, lost 0.3 percent today. The gauge has fallen every day bar one in the past three weeks. Industrial and commodity companies account for about 29 percent of the FTSE 100, according to data compiled by Bloomberg.
Unilever Plc, which relies on emerging markets for 57 percent of its sales, fell 0.8 percent to 2,339 pence to complete its worst week since August 2010. Standard Chartered Plc, which generates about 88 percent of revenue from outside the U.K. and the Americas, slipped 1.6 percent to 1,240 pence, its eighth day of losses. The companies are among the most dependent on emerging-market sales in Europe, according to Morgan Stanley data.
Vedanta slid 3.6 percent to 807.5 pence, its biggest decline in seven weeks. Copper output dropped 23 percent in India and Australia, and 19 percent in Zambia, the mining company said in a statement. The commodity producer sank 14 percent in January.
Diageo lost 1.1 percent to 1,800.5 pence. Goldman Sachs downgraded the stock to neutral from conviction buy after the company reported its financial results yesterday. The brokerage reduced its full-year earnings-per-share estimates by 13 percent for this year and for 2015, and by 16 percent for 2016.
A gauge of London-listed lenders fell 0.7 percent. Royal Bank of Scotland Group Plc dropped 2.1 percent to 340 pence, while Barclays Plc decreased 0.9 percent to 272.5 pence.
Imperial Tobacco added 1.9 percent to 2,223 pence. Goldman Sachs upgraded the maker of Davidoff cigarettes to conviction buy from neutral, saying the stock’s recent decline provides a buying opportunity. The shares retreated 6.7 percent this month through yesterday.
BT rose 3.3 percent to 383.3 pence. The U.K.’s largest landline phone operator reported adjusted earnings before interest, taxes, depreciation and amortization of 1.54 billion pounds ($2.5 billion) for the three months ended Dec. 31, exceeding the 1.5 billion-pound average analyst projection. BT said full-year Ebitda will probably reach the upper limit of its previous forecast of 6 billion pounds to 6.1 billion pounds.
The number of shares trading hands today in FTSE 100-listed stocks was 22 percent greater than the average of the past 30 days, data compiled by Bloomberg showed.