U.K. Stocks Little Changed Before EU Summit; Croda Gains
U.K. stocks were little changed, after the benchmark FTSE 100 Index swung between gain and losses, as investors speculated on the outcome of this week’s European Union summit.
Croda International Plc (CRDA) added 2.7 percent after JPMorgan Chase & Co. upgraded the chemical maker. Shire Plc climbed 3.2 percent, rebounding from yesterday’s 11 percent plunge. Royal Bank of Scotland Group Plc (RBS) fell more than 3 percent, leading a gauge of British lenders lower.
The FTSE 100 fell 0.1 percent to 5,446.96 at the close in London, after swinging between gains and losses at least 20 times today. The gauge slipped for a fourth day, its longest stretch of losses since May 18. The broader FTSE All-Share Index also slid 0.1 percent today, while Ireland’s ISEQ Index increased 0.1 percent.
“Markets are getting jittery now ahead of the summit of EU leaders and are wary they might be disappointed with the outcome,” Michael Crowley, an economist at Bank of Ireland Global Markets in Dublin, wrote in a report. “The most the summit is likely to do is outline possible steps towards creating the necessary construct to support monetary union. The euro area is still likely to remain in a crisis state for some time yet.”
The FTSE 100 (UKX) has lost 2.3 percent this year amid concern the euro area’s sovereign-debt crisis will derail global growth. Stocks dropped yesterday on speculation the EU summit would not lead to decisive measures to contain the crisis.
German Chancellor Angela Merkel today told members of the Free Democratic Party coalition partner in her government that she expects no shared liability for euro-area debt during her lifetime, according to an official who was present at the meeting. The official declined to be identified because the meeting was private.
The leaders of the 27 EU states will attend pre-summit meetings as they work to narrow their differences before the June 28-29 meeting.
Croda International gained 2.7 percent to 2,183 pence after JPMorgan raised its recommendation for the world’s second- largest maker of cosmetic ingredients to overweight from neutral, meaning investors should buy the shares.
Shire (SHP) added 3.2 percent to 1,798 pence as Berenberg Bank raised its recommendation for the drugmaker to buy from hold, saying yesterday’s selloff, the biggest in nine years, presented a buying opportunity.
Societe Generale SA also upgraded Shire to buy from hold, while analysts at Panmure Gordon raised their rating to hold from sell. Shire plunged yesterday after the Food and Drug Administration approved a generic version of its second-biggest selling treatment for use in the U.S.
Catlin Group Ltd. (CGL) increased 1.3 percent to 420.3 pence as Citigroup Inc. raised its recommendation for the Lloyd’s of London insurer to buy from neutral.
William Hill Plc (WMH) rose 2.1 percent to 284.2 pence as JPMorgan raised the betting company to overweight from neutral.
RBS declined 3.8 percent to 227.7 pence for its fourth day of losses as the lender worked to update its customers’ account balances following last week’s computer failure. The lender has extended opening hours at more than 1,200 branches in the U.K. and Ireland this week.
Bank of England Governor Mervyn King said today that the U.K.’s Financial Services Authority should carry out a full investigation into the IT breakdown.
Serco Group Plc (SRP) dropped 1.9 percent to 529.5 pence after predicting a small reduction in organic revenue in the first half. The stock fell even as Serco said it will still meet estimates for 2012.
Ocado Group Plc (OCDO) sank 20 percent to 86 pence after the U.K.’s largest online grocer said the grocery market and the economy “remain challenging and uncertain.” The company also warned that the London Olympics may disrupt business this summer as people alter their shopping habits and traffic restrictions hamper deliveries.
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