U.K. Stocks Drop as BG Group Shares Slump on Outlook
BG Group plunged 14 percent after saying project delays will hold back output growth next year. Barclays Plc (BARC) declined 4.7 percent after disclosing two additional investigations by U.S. regulators. International Consolidated Airlines Group SA (IAG), the owner of British Airways, advanced 1.7 percent after Air France-KLM Group and Deutsche Lufthansa AG posted earnings that beat analysts’ estimates.
The FTSE 100 Index slipped 67.20 points, or 1.2 percent, to 5,782.7 at the close in London. The gauge still climbed 0.7 percent in October, its fifth month of gains and its longest winning streak since April 2006, as U.S. economic reports exceeded forecasts. The broader FTSE All-Share Index lost 1 percent, while Ireland’s ISEQ Index was little changed.
“Traders turned up the heat on BG Group as the energy company lowered its production target for 2012,” David Madden, a market analyst at IG in London, wrote in e-mailed comments. “The nightmare on Wall Street is over as the New York Stock Exchange and NASDAQ reopen after Hurricane Sandy.”
U.S. equity trading resumed today after the longest weather-related shutdown in more than a century. Exchanges closed for two days after Sandy halted public transport and forced evacuations in New York.
A U.S. business activity gauge from the Institute for Supply Management-Chicago Inc. increased to 49.9 in October from 49.7 in September. A reading of 50 is the dividing line between expansion and contraction. The median estimate of 54 economists surveyed by Bloomberg forecast had called for an increase to 51. The projections ranged from 49.1 to 54.3.
Euro-area governments pressed Greece to make deeper spending cuts to keep aid flowing, in the latest test of will during the three-year battle to prevent the single currency’s breakup.
With Greece pleading for a 31 billion-euro ($40 billion) aid payout in November and facing a sixth year of recession in 2013, the region’s finance ministers said unfreezing loans for the country required more efforts in Athens to rein in the budget deficit and deregulate the economy.
In the U.K., a report from GfK NOP Ltd. showed that consumer confidence fell to a six-month low in October. An index of sentiment dropped to minus 30 from minus 28 in September, the research group said. A gauge of how consumers see their personal financial situation over the next year dropped 5 points to minus 13, also the lowest in six months.
BG Group plunged 14 percent to 1,147.5 pence, its biggest decrease since at least September 1988, after the U.K.’s third- largest natural-gas producer said delays to projects in the North Sea, Brazil and Egypt will hold back output growth in 2013. The company said production next year will be “in line” with that in 2012.
Barclays slid 4.7 percent to 227.5 pence, the most in more than four months. The bank today reported third-quarter revenue from fixed income, commodities and currencies, known as FICC, that missed analysts’ estimates.
Barclays said the Federal Energy Regulatory Commission has probed its western U.S. power trading business between 2006 and 2008 and could issue a notice of penalties as soon as today.
It also said the Department of Justice and the Securities and Exchange Commission have investigated whether the group’s relationships with third parties who assist the bank to win or retain business comply with the Foreign Corrupt Practices Act.
Earnings excluding some items decreased 15 percent to 1.97 billion pounds ($3.17 billion), or 26.5 pence a share. That missed the average estimate of 28 pence from 14 analysts surveyed by Bloomberg. Sales declined 8 percent to 6.53 billion pounds, falling short of the average analyst estimate of 6.66 billion pounds.
IAG rallied 1.7 percent to 161.3 pence. Air France and Deutsche Lufthansa posted earnings that beat analysts’ estimates as Europe’s two biggest airlines began to reap the benefits of cost savings.
Third-quarter operating profit at Air France-KLM jumped 27 percent to 506 million euros ($657 million), surpassing the average analyst prediction for 434 million euros. The profit measure increased 6.2 percent to 648 million euros at Lufthansa, exceeding a 522 million-euro forecast.
Tullow Oil (TLW), the U.K.-based explorer with the most licenses in Africa, climbed 1.6 percent to 1,404 pence after Kenya’s Business Daily newspaper said the company has discovered oil at its second well in the country.
Separately, Tim O’Hanlon, Tullow’s vice-president of African business, said the company will start taking out oil at its Jubilee field in Ghana by the end of the year.
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