U.K. Stocks Decline as Carney Sees No Stimulus Need
U.K. stocks fell, extending the FTSE 100 Index’s first weekly loss since August, as Bank of England Governor Mark Carney told a U.K. newspaper he sees no need for further stimulus and the U.S. budget deadline neared.
Countrywide Plc dropped 4.9 percent as Alchemy Partners LLP sold a 5.9 percent stake in the real estate broker. A gauge of London-listed mining stocks fell 1.7 percent, paring its best quarter since 2010. Persimmon Plc (PSN) led housebuilders lower after the U.K. government said it will carry out annual checks on its home-buying-assistance program amid criticism it may lead to excessive real estate prices.
The FTSE 100 lost 52.93 points, or 0.8 percent, to 6,512.66 at the close of trading in London, extending this week’s retreat to 1.3 percent. Carney told the Yorkshire Post newspaper that he has not supported the case for further stimulus because the U.K. economic recovery is stronger and broader.
“Some people may see Carney’s comments as hawkish,” said Alan Higgins, U.K. chief investment officer for Coutts & Co. in London. “I’ll just take it as a statement of fact. We stopped quantitative easing when the U.K. economy was much weaker so it would only be crazy to go back.”
The FTSE 100 has climbed 1.6 percent this month as the Federal Reserve unexpectedly refrained from reducing its monthly asset purchases. The gauge has rallied 4.8 percent in the third quarter, bringing the 2013 advance to 10 percent. The broader FTSE All-Share Index fell 0.8 percent today, while Ireland’s ISEQ Index retreated 0.5 percent.
U.S. lawmakers have until Monday to agree to an emergency budget to keep the federal government operating from Oct. 1, the beginning of the 2014 fiscal year. The Senate plans to vote today on a stopgap spending bill and send it back to the House. A three-to-four week shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points, said Mark Zandi of Moody’s Analytics Inc.
“What’s happening in Washington is a head fake,” said Higgins, whose firm oversees the equivalent of $49.5 billion globally. “We’ve seen this many times before and they just delay it to the very end to see who can get the biggest political advantage.”
The number of shares changing hands today in FTSE 100-listed stocks was 16 percent lower than the average of the past 30 days, data compiled by Bloomberg data showed.
Countrywide (CWD) dropped 4.9 percent to 518 pence, the largest decline since the shares first listed in March. Alchemy sold about 12.9 million shares in the company at 525 pence each, according to terms obtained by Bloomberg News. An institutional investor also sold a separate 2.4 percent stake at the same price, the terms showed.
A measure of mining companies listed on the FTSE 350 Index fell 1.7 percent, trimming a 16 percent quarterly advance. Rio Tinto Group and BHP Billiton Ltd. (BHP), the world’s largest mining companies slipped 2.3 percent to 3,067 pence and 2.2 percent to 1,841 pence. Anglo American Plc (AAL) dropped 1.9 percent to 1,540 pence. The shares slid 3.2 percent this week for the biggest decline in almost three months.
Persimmon dropped 4.3 percent to 1,061 pence, while Bellway Plc (BWY) declined 3.1 percent to 1,262 pence. Bovis Homes Group Plc slipped 2.7 percent to 712 pence. Chancellor of the Exchequer George Osborne and the Bank of England will reassess the Help-to-Buy program, which allows the purchase of homes with a deposit as small as 5 percent, every September from 2014, the Treasury said.
Osborne’s plan has drawn criticism from the International Monetary Fund and Business Secretary Vince Cable, who say it may spark a property bubble. Data today showed U.K. house prices posted the biggest annual increase in September since July 2010.
SABMiller Plc (SAB), the world’s second-biggest brewer, dropped 2.1 percent to 3,165 pence. Credit Suisse Group AG cut its rating on the beverage industry to benchmark, similar to neutral, from overweight, citing valuations. The Stoxx 600 Food & Beverage Index trades at 18.2 times projected earnings, compared with 14.3 times profit for the broader gauge, according to data compiled by Bloomberg.
Michael Page International Plc (MPI) increased 1.1 percent to 490.2 pence after Goldman Sachs Group Inc. upgraded the stock to buy from neutral, saying the recruitment firm will benefit from a pick-up in the European economy.
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