U.K. Stocks Retreat as Rio Leads Mining Companies Lower
U.K. stocks fell for the first time in four days, led by a selloff in mining companies, as base metals declined and U.S. economic growth trailed forecasts.
Rio Tinto Group and Anglo American Plc (AAL) retreated more than 2.5 percent as copper and lead declined. Eurasian Natural Resources Corp. (ENRC) sank 6.8 percent as analysts downgraded the shares. Standard Life Plc slipped 1.2 percent as Chief Financial Officer Jackie Hunt resigned to move to a rival insurer. Ocado Group Plc (OCDO) fell for the first day this week as the online grocer ruled out a takeover by William Morrison Supermarkets Plc.
The FTSE 100 (UKX) Index lost 16.17 points, or 0.3 percent, to 6,426.42 at the close in London. The benchmark gauge is still up 2.2 percent this week, the biggest advance since Jan. 4, amid speculation the European Central Bank will cut interest rates next week. The broader FTSE All-Share Index fell 0.3 percent today, and Ireland’s ISEQ Index slid 1 percent.
“I am a little bit cautious in the short term,” said Ian Williams, a market strategist at Peel Hunt LLP in London. “I am not surprised we have see a bit of a flattening out in the market. Next week, the macro calender is packed. There are quite a few banana skins, so I would be pulling back on some of the more bullish positions.”
Commerce Department figures today showed the U.S. economy, the world’s largest, grew at a 2.5 percent annual rate in the first quarter. The median estimate of 86 economists surveyed by Bloomberg had called for a 3 percent gain. Consumer spending, the biggest part of the economy, climbed by the most since the fourth quarter of 2010.
Reports in the U.S. next week may show the pace of construction spending slowed and manufacturing growth cooled, according to Bloomberg surveys of economists. The ECB will announce its decision on interest rates on May 2.
The volume of shares changing hands in FTSE 100-listed companies today was 30 percent lower than the 30-day average, according to data compiled by Bloomberg.
A gauge of U.K. mining companies dropped 2.4 percent today, paring its weekly advance to 1.9 percent, as copper led base metals lower on the London Metal Exchange.
China’s top leaders said the country must guard against financial risks and boost consumption amid signs that the recovery in the world’s second-biggest economy is faltering, according to a Politburo Central Committee statement released through the official Xinhua News Agency yesterday.
Rio Tinto, the world’s second-largest mining company, fell 2.7 percent to 2,959.5 pence. Anglo American dropped 2.6 percent to 1,606 pence and Antofagasta Plc (ANTO), which mines for copper in Chile, retreated 3.9 percent to 916 pence.
ENRC, the producer of iron ore in Kazakhstan facing an investigation from the U.K.’s Serious Fraud Office, tumbled 6.8 percent to 269.3 pence as Royal Bank of Canada downgraded the stock to underperform from sector perform. The SFO said yesterday it has opened a formal probe into allegations that ENRC paid bribes to win business in Kazakhstan and Africa.
Standard Life (SL/) declined 1.2 percent to 387.3 pence as Hunt left to join Prudential Plc. (PRU) She will run U.K. and European operations at Britain’s biggest insurer. Standard Life, Scotland’s largest insurer, is yet to appoint a replacement.
Ocado dropped 1.8 percent to 165 pence as the company repeated that any joint venture with Morrison won’t involve a takeover or the purchasing of shares. The stock jumped 12 percent yesterday on speculation that Morrison may buy into the business as part of a deal that would mark its entry into the online grocery market.
Talks between the two parties that were first disclosed on March 14 are continuing, Ocado said yesterday in a statement after markets closed, adding that there can be no certainty that an agreement will be reached.
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