U.K. Stocks Little Changed as Utilities Climb
U.K. stocks were little changed, after their biggest two-day advance since August, as a rally by utility companies offset a failure by euro-area finance ministers to agree on a debt package for Greece.
United Utilities Group Plc (UU/) gained 1.9 percent after JPMorgan Chase & Co. said Ofwat, the water regulator, had clarified proposed changes to companies’ licenses. British Land Co. added 1.8 percent after Morgan Stanley upgraded the shares. Johnson Matthey Plc (JMAT) plunged 5.8 percent after the producer of a third of the world’s autocatalysts reported net income that missed analysts’ estimates.
The FTSE 100 Index climbed 3.93 points, or 0.1 percent, to 5,752.03 at the close in London. The gauge rose 0.2 percent yesterday, completing its biggest two-day rally since August, as shareholders approved the $31 billion takeover of Xstrata Plc (XTA) and ministers met to discuss Greece. The FTSE All-Share Index and Ireland’s ISEQ Index were both little changed.
“Having stood their ground yesterday, markets are rather shakier” today, said Chris Beauchamp, a market analyst at IG in London. “Euro-zone ministers once again failed to throw a deal together, as talks over the latest rescue plan for Greece fell apart. The next attempt begins in six days, so we will just have to be patient for now.”
After more than 11 hours of talks, the finance ministers of the 17 countries that use the single currency broke up their meeting early today in Brussels. With creditors led by Germany refusing to contribute additional money or offer debt relief, the finance chiefs failed to scrape together sufficient funds from other sources to help alleviate Greece’s debt burden, which will hit 190 percent of gross domestic product in 2014.
They declared that an agreement will not take place before a ministerial meeting on Nov. 26. An aid payment delayed since June remained frozen.
United Utilities gained 1.9 percent to 671.5 pence and Severn Trent Plc increased 1.4 percent to 1,569 pence after JPMorgan said the water regulator’s update on licenses should reassure investors.
The “clarification of its license-modification proposals after market close yesterday should help reassure the market that U.K. water regulation remains sensible and proportionate,” analyst Edmund Reid wrote in a note to clients dated today. “The softening of Ofwat’s stance on a Competition Commission referral reduces the near-term risk of negative newsflow.”
British Land (BLND) rose 1.8 percent to 524 pence after Morgan Stanley raised its recommendation for the U.K.’s second-largest real estate investment trust to overweight, the equivalent of a buy rating. British Land has gained 11 percent this year, while Land Securities Group Plc has rallied 22 percent.
“We think the shares are now attractive to investors who focus on net asset value as well as for those who prefer an income approach,” wrote Bart Gysens in a note to clients dated today. “The shares have traded off recently to a level from where we expect around 16 percent total return -- share-price performance plus dividend yield -- in the next 12 months.”
BG Group Plc (BG/) climbed 2.8 percent to 1,060 pence, the biggest advance on the FTSE 100, amid speculation the company may become the target of a takeover.
The Independent reported that the oil and gas producer was said to have hired Rothschild and Goldman Sachs Group Inc. to help it manage any hostile takeover attempt, without saying where it got the information. The newspaper cited speculation that investors were about to put a bid to BG’s advisers.
Johnson Matthey dropped 5.8 percent to 2,190 pence after reporting a 2.2 percent decline in first-half profit to 145.7 million pounds ($232.3 million). That missed the average analyst estimate of 149 million pounds, data compiled by Bloomberg show.
The shares fell as Chief Executive Officer Neil Carson said in a statement that “the outlook in some of our other markets has weakened and visibility remains limited.” He predicted that the company’s performance in its second half will be little changed from the first half of the year.
Compass Group Plc (CPG) slipped 1.3 percent to 699.5 pence after the world’s largest catering company reported full-year revenue of 16.9 billion pounds, falling short of the average analyst estimate of 17 billion pounds. The shares fell even as underlying pretax and operating profit matched projections.
“We anticipate that economic conditions in Europe will remain challenging, with like-for-like volume under ongoing pressure,” Chief Executive Officer Richard Cousins said in a statement. “Our core business remains solid and we are taking action to re-base our business in Southern Europe.”
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