U.K. Stocks Decline for Second Day; G4S Gains, IAG Falls
U.K. stocks declined for a second day as Greek leaders called new elections after failing to form a government for the nation that is struggling with debt and austerity.
International Consolidated Airlines Group SA (IAG) led losses after JPMorgan Chase & Co. downgraded its recommendation on the stock. Inmarsat Plc also fell. G4S Plc (GFS), the security-services company, rose after posting a 7.5 percent increase in first- quarter revenue.
The FTSE 100 (UKX) dropped 0.5 percent to 5,437.62 at the close in London, after earlier rising as much as 0.8 percent following a report that showed faster-than-forecast economic growth in Germany. The gauge erased gains after Greek Pasok party leader Evangelos Venizelos said new elections will be held. The FTSE All-Share Index lost 0.6 percent today, while Ireland’s ISEQ Index was little changed.
“The euro-zone is the crux of the problem,” said Edouard Carmignac, chief investment officer at Carmignac Gestion, which oversees about 50 billion euros ($64 billion). “It reverberates worldwide, but that is where it may get nastier,” he said at a presentation in London today.
German gross domestic product grew five times as fast as economists forecast in the first quarter as exports to emerging markets offset waning euro-area demand. In the 17-nation euro region, GDP stagnated, compared with a median forecast in a Bloomberg survey that called for a 0.2 percent contraction.
“It was a real relief if you take into consideration all the nervousness of the market regarding the macro picture and developments in Greece,” said Stephane Ekolo, strategist at Market Securities in London, in reference to the European reports. “But we need more to have a continuation of this trend.”
In the U.S., reports on retail sales matched economists’ expectations.
International Consolidated Airlines, owner of British Airways Plc, lost 6 percent to 149.90 pence, the most since November. JPMorgan cut the stock to neutral, the equivalent of hold, from overweight. The broker cited a slowdown in Spain, losses in the BMI division and the possibility of a stake disposal from shareholder Bankia SA.
Separately, British Airways and Deutsche Lufthansa AG may lose bids to limit compensation to passengers whose flights are delayed, an aide to the European Union’s top court said in a non-binding opinion.
Inmarsat, the biggest provider of satellite services to the maritime industry, fell 3.3 percent to 421.4 pence. LightSquared Inc., a former client of Inmarsat which had missed payments, filed for bankruptcy yesterday.
Spirax-Sarco Engineering Plc retreated 5.1 percent to 2,050 pence. The company fell the most in the FTSE 350 Index after saying performance in the four months through April was hurt by an economic downturn in Latin America, higher input costs and a strengthening U.K. currency.
G4S rose 3.2 percent to 275.2 pence. The company said first-quarter revenue increased 7.5 percent at constant exchange rate from the same period last year, led by demand from emerging markets. The company said it expects the rate of growth to improve this year and profit margins to expand in the second half.
Smiths Group Plc (SMIN) advanced 1.5 percent to 1,041 pence. The company said sales and operating profit grew in the nine months to April 28 from the year-earlier period, driven by improved volumes and profit margins in some divisions. The company reiterated its guidance “despite the continued difficult economic and trading conditions,” it said in a statement.
Renishaw Plc (RSW) gained 9.4 percent to 1,467 pence, the biggest jump since January. The manufacturer of inspection equipment said revenue rose in its third quarter and added that the final quarter in its fiscal year has “started well.”
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