U.K. Stocks Fall; Mining Companies Drop on China Slowdown
U.K. stocks fell for a fifth day, the longest streak of losses since November, as commodities producers slid amid signs of slowing growth in China.
BHP Billiton Ltd. (BHP) and Rio Tinto Group, the biggest London-listed mining companies, declined more than 1 percent. Banking shares slid, with Royal Bank of Scotland Group Plc retreating 5.1 percent. London Stock Exchange Group Plc (LSE), Europe’s oldest independent bourse, advanced 2.9 percent after fiscal second-half profit quadrupled.
The benchmark FTSE 100 Index (UKX) dropped 70.76, or 1.3 percent, to 5,267.62 at the close in London, extending this week’s retreat to 5.5 percent. The gauge has declined 12 percent from its 2012 high on March 16 amid growing concern Greece will default on its debt, entering a so-called correction. The FTSE All-Share Index fell 1.4 percent today, while Ireland’s ISEQ Index slipped 0.4 percent.
“Bulls will doubtless be glad to put this week behind them, having had to endure a wave of selling that has its origins in Europe,” Chris Beauchamp, a market analyst at IG Index in London, wrote in an e-mail. “Monday morning will probably find us in very much the same position in which we are now.”
The FTSE 100 has tumbled 8.2 percent in May as almost $4 trillion has been wiped from global equity markets. Greece’s credit rating was reduced one level by Fitch Ratings late yesterday amid concern it will not muster the political support needed to sustain its membership in the euro area.
Greece swore in a caretaker government led by Panagiotis Pikrammenos yesterday as the leaders of the two biggest parties clashed over how the country could stay in the 17-nation euro region.
Moody’s Investors Service lowered debt ratings at 16 Spanish banks, citing a surge in soured loans, the country’s recession, restricted funding access and the reduced ability of the government to support lenders as its own creditworthiness diminishes.
BHP Billiton fell 1.2 percent to 1,704.5 pence and Rio Tinto retreated 2.4 percent to 2,788 pence. Commodity shares dropped after data today showed China’s home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts, adding to signs of slowing growth in the world’s second-largest economy.
Vedanta Resources Plc (VED) slipped 2.7 percent to 958.5 pence and Xstrata Plc lost 4.3 percent to 914.7 pence.
Banking shares declined, with RBS retreating 5.1 percent to 19.99 pence and Lloyds Banking Plc falling 6.2 percent to 25.95 pence. The stocks are at the lowest levels of the year. Barclays Plc slid 3.2 percent to 176.1 pence, for the biggest weekly drop since August.
U.K. commercial real-estate investors may be unable to refinance as much as 100 billion pounds ($158 billion) of loans and the euro-region’s debt crisis is making banks less willing to extend credit, according to a study by De Montfort University.
About 72.5 billion pounds to 100 billion pounds “will struggle to be refinanced on current market terms,” according to a December survey of 63 lenders by the university, located near Leicester, England. The borrowers will have insufficient collateral to refinance maturing loans under current lending terms, the study showed.
SIG Plc (SHI), a supplier of insulation and roofing, dropped 2.7 percent to 89.5 pence after the company reiterated that market volume will be slightly down in 2012, adding that it sees uneven demand patterns over the year.
John Menzies Plc (MNZS) fell 5.3 percent to 584.5 pence after Numis Securities Ltd. downgraded the newspaper and magazine distributor to add from buy.
LSE rose 2.9 percent to 992 pence after its fiscal second-half profit quadrupled. Net income for the six months ended March 31 climbed to 405.9 million pounds ($640 million) from 89.4 million pounds a year earlier, according to Bloomberg calculations based on full-year results in a Regulatory News Service statement today.
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