U.K. Stocks Little Changed Amid U.S. Debt-Ceiling ConcernSofia Horta e Costa
U.K. stocks were little changed amid concern that U.S. lawmakers will fail to increase the federal government’s debt ceiling.
Lonmin Plc rallied 4 percent as platinum climbed. Burberry Group Plc rose 4.6 percent after reporting better-than-forecast third-quarter sales. Royal Bank of Scotland Group Plc fell 2.9 percent after people familiar with the situation said the lender may pay 500 million pounds ($804 million) in fines.
The FTSE 100 added 9.45 points, or 0.2 percent, to 6,117.31 at the close in London, erasing a slide of as much as 0.4 percent. The equity benchmark rose to its highest level since May 2008 last week amid optimism that U.S. companies’ earnings would exceed analysts’ estimates. The broader FTSE All-Share Index also rose 0.2 percent today, while Ireland’s ISEQ Index fell 0.3 percent.
The volume of shares changing hands in FTSE 100 companies was 28 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
“There seems to be some intolerance from both parties in the U.S., and investors are mainly waiting for a sign of a resolution regarding spending cuts, which is essentially the biggest part of a budget deal,” said Paulo Goncalves, who helps manage about $233 million at Banco Popular Portugal SA in Lisbon. “This has been bothering markets a little lately, and is back today after Obama’s comments last night.”
President Barack Obama said yesterday that he won’t negotiate over raising the government’s debt ceiling because the U.S. has to pay for spending it has authorized. The president warned of economic calamity and stalled payments to Social Security recipients, military personnel and government creditors if congressional Republicans fail to lift the $16.4 trillion debt limit. Congress has raised or revised the debt limit 79 times since 1960, according to the Treasury Department.
Federal Reserve Chairman Ben S. Bernanke said that the central bank’s $85 billion in monthly purchases of bonds bolsters the economy.
“We think we are getting some effect; it is kind of early,” Bernanke said yesterday at the University of Michigan’s Gerald R. Ford School of Public Policy in Ann Arbor. “We are going to continue to assess how effective” the program is “because it is possible that as you move through time and the situation changes that the impact of these tools could vary.”
In Germany, gross domestic product may have dropped as much as 0.5 percent in the fourth quarter, the Federal Statistics Office in Wiesbaden said in a preliminary estimate. In 2012, growth slowed to 0.7 percent from 3 percent in 2011, it said. Economists had forecast an expansion of 0.8 percent for last year, according to a Bloomberg News survey.
Lonmin, which runs the Marikana platinum mine in South Africa, jumped 4 percent to 346 pence after Anglo American Platinum Ltd. said it would cut output by as much as 19 percent. The world’s biggest platinum producer, which is also known as Amplats, will idle four mine shafts in South Africa, effectively reducing global output of the metal by almost 7 percent.
Platinum climbed 1.6 percent, rising to its highest price in almost three months. Aquarius Platinum Ltd., which also extracts platinum from facilities in Africa, surged 11 percent to 72 pence, its biggest gain in more than a week.
Burberry soared 4.6 percent to 1,386 pence, the biggest gain on the FTSE 100 Index, as demand for higher-priced styles increased sales in its own shops. Revenue jumped 7 percent to 613 million pounds, the U.K.’s largest luxury-goods company said. That exceeded the 601.4 million-pound average of analysts’ estimates compiled by Bloomberg.
Pearson Plc added 3.3 percent to 1,221 pence, its largest advance in nine months, as UBS AG added the publisher to its list of most preferred media stocks. The shares trade cheaper than other global companies, which is unjustified as U.S. schools may drive growth in Pearson’s education unit this year, analyst Alastair Reid wrote in a note. The stock retreated 1.8 percent in 2012, its first annual drop in since 2008.
RBS dropped 2.9 percent to 354.1 pence, halting a seven-day rally, after people with knowledge of the matter said the lender may pay fines to settle allegations that traders tried to rig interest rates. Investment banking chief John Hourican and markets head Peter Nielsen may have to leave, two people said.
ARM Holdings Plc fell 3.7 percent to 841 pence, its biggest drop in more than three months. Morgan Stanley lowered its rating on the designer of chips for Apple Inc.’s iPhones to equal weight from overweight, meaning that investors should not buy more of the shares. The brokerage cited its valuation.
IG Group Holdings Plc slipped 1.1 percent to 462.5 pence. The owner of the IG spread-betting business said first-half net trading revenue decreased 14 percent to 169 million pounds and pretax profit slid 21 percent to 81.1 million pounds.