U.K. Stocks Slide as U.S. Manufacturing Misses Estimates
U.K. stocks fell, following their first weekly gain in a month, as world leaders meet to discuss the situation in Ukraine, and data showed that U.S. manufacturing expanded at a slower-than-expected pace.
Centrica Plc and SSE Plc (SSE) dropped more than 1.5 percent after a report that the energy regulator may refer the country’s largest utilities to the competition authority. Diploma Plc slumped the most in five years after saying the strong pound will hurt sales and profit this year. Centamin Plc (CEY) rallied 9.9 percent after posting better-than-forecast 2013 profit.
The FTSE 100 (UKX) slipped 36.78 points, or 0.6 percent, to 6,520.39 at the close of trading in London. The gauge rose 0.5 percent last week as investor concern dissipated that the Ukraine crisis would lead to wide-ranging disruption to trade. The broader FTSE All-Share Index also lost 0.6 percent today, while Ireland’s ISEQ Index dropped 1.4 percent.
“Crimea is still a point of focus for investors,” Peter Braendle, who oversees about 500 million Swiss francs ($566 million) as a portfolio manager at Swisscanto Asset Management, said in a message from Zurich. “It may not shock markets anymore, but it doesn’t help sentiment.”
President Barack Obama and other world leaders meet in The Hague today to discuss the situation in Ukraine as Russia masses soldiers near the former Soviet republic’s border. U.S. intelligence and military officials said some Russian troops are within 31 miles of the frontier. The U.S. and European Union have ruled out military action.
London-based Markit Economics said its preliminary index of U.S. manufacturing decreased to 55.5 in March from 57.1 a month earlier. The median forecast in a Bloomberg survey of economists was 56.5. A reading above 50 indicates expansion.
China’s manufacturing industry contracted for a third straight month in March, according to a preliminary reading. The Purchasing Manager’s Index from HSBC Holdings Plc and Markit dropped to 48.1, compared with the 48.7 median estimate of 22 analysts surveyed by Bloomberg News. The number compares with February’s final 48.5 figure.
Separate preliminary data showed that a gauge of manufacturing in the euro area declined to 53 in March, in line with forecasts, from 53.2 the previous month. In Germany, it fell to 53.8 from 54.8, missing estimates for 54.5.
Centrica lost 1.9 percent to 331.5 pence, while SSE fell 2.3 percent to 1,475 pence. Energy regulator Ofgem may say this week that it intends to refer the six largest U.K. energy suppliers to the Competition & Markets Authority, the Sunday Times reported, citing people it didn’t name. A break up could force the separation of power-generation and retail operations, according to the newspaper.
Diploma fell 7.7 percent to 701.5 pence. Adjusted profit before tax will be little changed this year because of exchange-rate effects, the supplier of medical equipment and hydraulic seals said today. Profit margins at its healthcare units may weaken in the second half of 2014 because of the strength of the euro and dollar against the Canadian and Australian currencies, and as hedging contracts expire.
Centamin jumped 9.9 percent to 57.7 pence. Net profit before tax fell to $184 million last year from $198.6 million in 2012 because of lower gold prices. Still, the commodity producer sold more gold and reduced costs to help profit exceed the $177.4 million average analyst projection compiled by Bloomberg. The cash cost of production fell to $663 per ounce in 2013 from $669 per ounce the previous year.
Phoenix Group Holdings gained 0.7 percent to 693 pence after Standard Life Plc said it is in talks to acquire Ignis Asset Management Ltd. from the manager of life insurance funds.
The companies are in exclusive talks over the unit, which manages about 67.6 billion pounds ($111 billion) in assets, according to separate statements today. A potential price wasn’t disclosed. The Sunday Times reported that Standard Life could bid 400 million pounds, without saying where it got the information.
Lloyds Banking Group Plc (LLOY) added 1.5 percent to 78.50 pence. Investec Plc raised its rating on the lender to buy from hold, citing the stock’s 10 percent loss since this year’s high on Jan. 15 through last week’s close.
Kentz Corp. jumped 2.9 percent to 754.5 pence. The Irish oil engineering company said 2014 financial results will probably exceed its previous projections.
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