U.K. Stocks Slide as Emerging-Market Currencies Decline
U.K. stocks slid, pushing the FTSE 100 (UKX) Index toward its biggest monthly drop since August, as decisions to increase interest rates in Turkey and South Africa failed to prevent emerging-market currencies from falling.
J Sainsbury Plc (SBRY) lost 2.3 percent after saying Justin King will step down as chief executive officer in July. Mulberry Group Plc tumbled 27 percent as the handbag maker projected full-year pretax profit that fell short of analysts’ estimates. Anglo American Plc (AAL) added 5.7 percent after saying that fourth-quarter platinum production increased 25 percent.
The FTSE 100 dropped 23.05 points, or 0.4 percent, to 6,544.28 at the close in London. The benchmark had gained as much as 1.1 percent as GfK AG forecast that consumer confidence in Germany will rise to the highest level in 6 1/2 years. The broader FTSE All-Share Index also fell 0.4 percent today, while Ireland’s ISEQ Index added less than 0.1 percent.
“After the bold move by the Turkish central bank, the very short-lived rebound in the lira has damaged market sentiment,” said Gillian Hollenstein, who helps oversee 100 million Swiss francs ($111 million) as chief investment officer of Labha Investment Advisors SA in Zurich. “Several central banks from India to South Africa have raised rates recently. However, after the reversal in the lira, there is an unwillingness to put money to work in equity markets.”
The Turkish lira gained 0.8 percent after strengthening as much as 4 percent and weakening as much as 3 percent. The currency had appreciated after the country’s central bank increased its one-week repo rate to 10 percent from 4.5 percent. South Africa’s rand slid 1.4 percent, erasing its earlier advance.
The Federal Reserve concludes a two-day meeting today. The Federal Open Market Committee will probably decide to reduce its bond purchases by $10 billion and by increments of the same amount at the next five meetings before announcing an end to the program no later than December, according to a Bloomberg survey on Jan. 10. The central bank decided last month to cut its monthly asset buying by $10 billion to $75 billion.
GfK forecast that its measure of German consumer confidence will advance to 8.2 next month, which would be its highest level since August 2007. The research company revised its reading for January to 7.7 from 7.6.
Sainsbury lost 2.3 percent to 348.5 pence. Justin King will step down after a decade in charge of the U.K.’s third-biggest food retailer. King presided over 36 consecutive quarters of growth in same-store sales. Mike Coupe, the grocer’s commercial director, will become the new CEO, the company said.
Mulberry tumbled 27 percent to 654 pence after saying full-year pretax profit will fall short of analysts’ estimates. The luxury-handbag maker said in a statement that wholesale sales in the year ending March 31 will decline by about 10 percent.
Anglo American gained 5.7 percent to 1,420.5 pence. The mining company that owns the world’s largest platinum producer reported equivalent refined output of the metal of 520,000 ounces for the three months ended Dec. 31. It produced 416,000 ounces a year earlier. Anglo American Platinum Ltd. has built stockpiles to enable it to fulfill its customers’ orders during a strike lasting as long as eight weeks.
Lonmin Plc (LMI), which also operates a platinum mine in South Africa, rose 4.2 percent to 328.4 pence.
Antofagasta Plc (ANTO) climbed 6.1 percent to 872.5 pence. The commodity producer controlled by Chile’s billionaire Luksic family estimated that it will produce 700,000 tons of copper and 270,000 ounces of gold in 2014. That beat forecasts from JPMorgan Chase & Co.
Vodafone Group Plc (VOD) added 1.3 percent to 226.3 pence after people familiar with the situation said AT&T Inc. remains interested in a potential acquisition of Europe’s biggest mobile-phone operator.
The volume of shares changing hands in FTSE-100 companies was 66 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
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