U.K. Stocks Retreat as Fresnillo Slumps on Dividend Cut
U.K. stocks retreated for a third day as a gauge of mining companies declined the most in a month, outweighing a report that showed manufacturing output climbed more than forecast.
Fresnillo Plc (FRES) lost 11 percent after the gold and silver producer cut its interim dividend by 68 percent from a year earlier because precious metals have slumped. InterContinental Hotels Group Plc (IHG) gained the most in almost two years after posting a 20 percent gain in first-half profit as revenue from the Americas rose. Standard Chartered Plc (STAN) climbed 2.9 percent after saying sales increased in the first half of this year.
The FTSE 100 Index (UKX) slid 15.37 points, or 0.2 percent, to 6,604.21 at the close of trading in London. The gauge has still rallied 9.5 percent from a low on June 24 as the Federal Reserve said it remains flexible on the pace of bond buying and as the Bank of England gave forward guidance on interest rates for the first time. The broader FTSE All-Share Index and Ireland’s ISEQ Index both slipped 0.3 percent today.
“The market has got a bit ahead of itself and any pullback would make a lot of sense,” said Andy Lynch, a portfolio manager at Schroder Investment Management Ltd. in London. “We have a few companies we’d like to buy at lower levels. Economic and corporate fundamentals are slowly improving. The Fed can’t be there forever. You can’t have your parents around all the time. At some point you have stand on your own two feet.”
U.K. manufacturing output increased 1.9 percent in June after shrinking for two consecutive months, a report from the Office for National Statistics showed today. Total industrial production rose 1.1 percent in June, after remaining unchanged in May. Both readings exceeded the median economist predictions.
Companies on the FTSE 100 will post combined earnings of 522.7 pence a share this year, according to analysts’ projections compiled by Bloomberg. That would be a 56 percent increase from 2012, data compiled by Bloomberg show. Analysts predicted sales will increase 5.3 percent in 2013.
The U.K. economy will probably grow 1 percent in 2013 and 1.6 percent in 2014, data compiled by Bloomberg show. Last year, the economy grew at its slowest pace since 2009.
In the U.S., Fed Bank of Dallas President Richard Fisher told investors yesterday that the central bank will not rescue them every time asset prices fall.
“Financial markets may have become too accustomed to what some have depicted as a Fed put,” Fisher said in a speech in Portland, Oregon. “Some have come to expect the Fed to keep the markets levitating indefinitely.”
Fed Bank of Chicago President Charles Evans will speak to reporters in Chicago after the close of European trading today.
Fresnillo sank 11 percent to 924.5 pence after cutting its half-year dividend to 4.9 cents per share from 15.5 cents in 2012. Gross profit slumped 27 percent to $518.9 million in the first six months of the year, the Mexico City-based commodity producer said in a statement.
A gauge of London-listed mining companies dropped 2.9 percent, its largest decline since July 5. Randgold Resources Ltd. slid 5.6 percent to 4,428 pence as gold traded at its lowest price in more than two weeks, while Rio Tinto Group lost 1.5 percent to 2,999.5 pence.
InterContinental rallied 6.4 percent 2,030 pence. Operating profit before exceptional items and tax climbed to $338 million from $281 million a year earlier, the owner of the Holiday Inn hotel chain said in a statement. The company also said it will pay a special dividend totaling $350 million and increase its interim dividend to 23 cents a share.
Standard Chartered, the lender which depends on Asia for most of its revenue, climbed 2.9 percent to 1,567.5 pence. Sales increased 6.6 percent to $9.99 billion, as revenue from Hong Kong, Africa and India rose, the bank said today.
Legal & General Group Plc (LGEN) gained 2.3 percent to 201.9 pence, extending its highest price in 14 years. The biggest manager of U.K. pension-fund assets increased its interim dividend by 22 percent to 2.4 pence a share. That beat the average analyst estimate of 2.28 pence.
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