U.K. Stocks Drop Most in a Month Amid U.S. Budget Concern
U.K. stocks declined the most in a month amid concern U.S. lawmakers may not reach a budget deal by the year-end deadline to prevent automatic tax increases and spending cuts from coming into effect in January.
The FTSE 100 Index (UKX) slipped 28.93 points, or 0.5 percent, to 5,925.37 at the close in London, the most since Nov. 26. The benchmark gauge has still rallied 6.3 percent this year as the European Central Bank announced an unlimited bond-buying plan and the U.S. Federal Reserve expanded asset purchases. The broader FTSE All-Share Index lost 0.5 percent today, while Ireland’s ISEQ Index retreated 0.3 percent.
“This is the last chance for U.S. politicians to reach an agreement,” said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “It’s difficult to anticipate what will happen, so investors feel the need to be cautious. At this stage, everything is possible. If a deal is done, markets are going to go up like a rocket. If not, it’s bad news, especially in the short term, so markets are going to go down.”
Obama, who returned early from a holiday in Hawaii yesterday, called congressional leaders to a White House meeting three days before a deadline to avert more than $600 billion in automatic tax increases and spending cuts.
Obama will meet House Speaker John Boehner and Senate Minority Leader Mitch McConnell, both Republicans, as well as Democrats Harry Reid, the senate majority leader, and Nancy Pelosi, the House minority leader.
Separately, the Republican-led House will hold an unusual session on the evening of Dec. 30.
Lonmin Plc slid 2.6 percent to 278 pence after saying CEO Ian Farmer will step down as he’s being treated for a “serious illness” that he was hospitalized for in August. Chief Financial Officer Simon Scott, who is the acting CEO, has asked not to be considered for a permanent position, the company said.
Lonmin shares have tumbled 25 percent from Aug. 16, when South African police fired on striking miners near the company’s Marikana operation, killing 34. The same day, Lonmin said Farmer had been hospitalized for an illness it didn’t specify.
A gauge of mining shares listed in the FTSE 350 Index declined 0.7 percent. Anglo American lost 0.9 percent to 1,904 pence, while Glencore retreated 1.2 percent to 353.65 pence.
British Sky Broadcasting Group Plc (BSY) slid 1.5 percent to 769 pence, while Informa Plc (INF) slid 1.1 percent to 450 pence. A gauge of media companies in the Stoxx Europe 600 Index lost 0.8 percent.
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