U.K. stocks fell for a fourth day, with the benchmark index tumbling to a seven-week low, as investors weighed data that showed manufacturing growth slowed from the U.S. to Britain and China.
Lloyds Banking Group Plc lost 4 percent after setting aside
1.8 billion pounds ($3 billion) more to compensate clients wrongly sold insurance. Reckitt rose 2.2 percent after Citigroup Inc. said a potential purchase of Merck & Co.’s consumer-health unit would strengthen the company’s portfolio. Randgold Resources Ltd. gained 6.3 percent after the gold miner said output rose 15 percent last year. Ryanair Holdings Plc jumped the most in eight months.
The FTSE 100 Index slipped 44.78 points, or 0.7 percent, to 6,465.66 at the close in London, its lowest level since Dec. 13. The gauge tumbled 3.5 percent last month as signs of a slowdown in China’s economy and cuts to Federal Reserve stimulus roiled emerging markets. The broader FTSE All-Share Index also lost 0.7 percent today, while Ireland’s ISEQ Index climbed 0.2 percent.
“It’s a broad-based selloff with companies exposed to emerging markets and banks performing poorly,” James Buckley, who helps oversee about $50 billion as a portfolio manager at Baring Asset Management Ltd. in London, said by telephone. “If the weakness in emerging markets remains in place, it’ll be difficult to see the market make progress, but stocks are at reasonable valuations.
The FTSE 100 trades at 12.7 times earnings in the next year, compared with its five-year average of 11.5 times. The Stoxx Europe 600 Index’s valuation is 13.5 times, while it’s five-year mean is 12.1 times.
U.S. data today showed the Institute for Supply Management’s factory index decreased to 51.3 in January from
56.5 the prior month. A Bloomberg survey of economists had projected a reading of 56. Investors are also awaiting a Labor Department report on Feb. 7 that may show the world’s largest economy added 180,000 jobs in January, versus 74,000 in December.
U.K. data showed that a purchasing managers’ index for manufacturing slipped to 56.7 in January from a revised 57.2 in December. Economists in a Bloomberg survey had called for a reading of 57.3.
In China, a manufacturing gauge showed output slowed in January to its lowest level in six months. The purchasing managers’ index fell to 50.5 from 51, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1. Numbers above 50 indicate activity increased. A separate report today showed output from services industries in the world’s second-largest economy also slowed last month.
Aberdeen Asset Management Plc, which invests about two-thirds of its assets in global emerging markets and Asia-Pacific stocks, fell 3.6 percent to 376.7 pence. Burberry Group Plc, which got the highest percentage of its revenue from the Asia-Pacific region last year, declined 2.8 percent to 1,407 pence.
Lloyds lost 4 percent to 79.99 pence. The latest provision brings the total it has set aside to compensate clients sold payment-protection insurance to 9.8 billion pounds, more than any other British bank. The U.K.’s biggest mortgage lender also signaled it won’t pay a dividend for 2013.
Barclays Plc fell 2.5 percent to 265.70 pence, as a gauge of London-listed banks slid to its lowest level since June.
Reckitt rallied 2.2 percent to 4,665 pence. Reuters reported on Jan. 31 Merck had received offers for its consumer health-care business. Such an acquisition would be consistent with Reckitt’s strategy and Merck’s brands, which includes Claritin allergy medicine and Coppertone sunscreen, would strengthen the company’s already strong position in the space, Citigroup wrote in a note today.
Randgold gained 6.3 percent to 4,455 pence. The company said production increased 15 percent to 910,373 ounces in 2013. Output will continue to rise for the next five years, with a jump of as much as 30 percent in 2014, Randgold said..
Ryanair jumped 6.3 percent to 6.71 euros in Dublin. Europe’s biggest discount carrier said non-ticket sales rose 13 percent in its third quarter through December and that bookings for the current period are significantly ahead of a year ago.
Weir Group Plc added 1.4 percent to 2,123 pence. Jefferies Group LLC wrote in a note today that investor interest in the company is rising, given its improving fundamentals and continuing speculation about a bid for the company.
Smith & Nephew Plc climbed 1.1 percent to 886 pence after agreeing to buy Austin, Texas-based ArthroCare Corp. for $1.7 billion in cash to add products for minimally invasive surgery used in sports medicine.