U.K. Stocks Retreat as Morrison Tumbles on Profit Outlook
Morrison slid the most in 11 years, leading grocers lower, after also saying it will sell property. Barclays Plc climbed 0.8 percent after Numis Securities Ltd. upgraded the bank. Home Retail Group Plc (HOME) advanced to its highest price since May 2011 after predicting that full-year profit would exceed the top end of analysts’ projections.
The FTSE 100 Index (UKX) fell 67.12 points, or 1 percent, to 6,553.78 at the close in London. The benchmark has declined 4.6 percent from its 14-year high on Feb. 24 amid concern that Russian military intervention in Ukraine will disrupt global trade. The broader FTSE All-Share Index also lost 1 percent today, while Ireland’s ISEQ Index slipped 0.6 percent.
“U.K. food retail as an industry is going through significant challenges,” Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England, said by phone. “You can see that looking at the extent to which underlying profits are declining at Morrison. These companies face a very difficult operating environment with continued focus on cost-conscious consumers. It’s very difficult for investors to see the upside for these stocks.”
Voters in the Crimean region of Ukraine will take part in a referendum on Sunday to decide whether to secede and join Russia. The Group of Seven nations said yesterday that they will not recognize the result of the plebiscite.
U.S. President Barack Obama, who met Ukraine’s interim Prime Minister Arseniy Yatsenyuk at the White House yesterday, said “the international community -- the European Union and others -- will be forced to apply a cost to Russia’s violations of international law and its encroachments on Ukraine.”
Ukraine says Russia has as many as 19,000 soldiers on the Crimean peninsula, where the majority of people speak Russian. Militias and troops in uniforms lacking insignia were deployed across Crimea after Ukraine’s former president, Viktor Yanukovych, fled the country.
Morrison tumbled 12 percent to 205.2 pence after forecasting underlying pretax profit of 325 million pounds ($541 million) to 375 million pounds this financial year. Profit in the previous year fell to 785 million pounds, according to a statement. The smallest of the U.K.’s four main grocers also said it will sell 1 billion pounds of property.
A gauge of food and drug retailers in the FTSE 350 Index slid 6.1 percent for the biggest drop in two years. Tesco Plc (TSCO), Britain’ largest supermarket chain, lost 5 percent to 298.8 pence and J Sainsbury Plc (SBRY) sank 8.5 percent to 304.9 pence.
Gulf Keystone Petroleum Ltd. slumped 16 percent to 120.3 pence after lowering its estimate of the oil remaining in the Shaikan field in Iraqi Kurdistan to 9.2 billion barrels from 13.7 billion barrels. The company revised the figures after commissioning a report from ERC Equipoise Ltd.
Barclays gained 0.8 percent to 235.7 pence. Numis upgraded the U.K.’s second-largest bank by assets to add from hold, meaning that investors should buy the shares. The brokerage said the outlook for the lender’s gross leverage and the European economy has improved.
Home Retail rallied 5 percent to 215.4 pence. The owner of the Argos chain of catalog shops said its full-year benchmark pretax profit probably exceeded the range of 107 million pounds to 111 million pounds projected by analysts. The company also said comparable sales at Argos in the eight weeks ended March 1 rose 5.2 percent, beating the 1.5 percent average increase in a Bloomberg survey. Home Retail reports results from its last financial year on April 30.
Centrica Plc (CNA) gained 2.1 percent to 334.8 pence after HSBC raised its recommendation on the owner of British Gas to overweight, which is similar to buy, from neutral. The brokerage said that lower capital expenditure in the utility’s gas-production business will enable it to increase cash flow.
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