U.K. Stocks Retreat as Cyprus Optimism Wanes; RBS DropsSarah Jones
U.K. stocks declined, erasing the FTSE 100 Index’s earlier advance, as banks and mining companies retreated after investor optimism faded over Cyprus’s bailout from the euro area.
Barclays Plc and Royal Bank of Scotland Group Plc fell more than 2 percent as bond yields climbed in Spain and Italy. Vedanta Resources Plc tumbled 4.8 percent as copper dropped in London. Vodafone Group Plc rose 2 percent after a report the company has held talks to sell its stake in Verizon Wireless.
The FTSE 100 lost 14.38 points, or 0.2 percent, to 6,378.38 at 4:30 p.m. in London. The equity benchmark earlier rallied as much as 1 percent after Cyprus struck a deal with the euro area to obtain a bailout. The broader FTSE All-Share Index decreased less than 0.1 percent today, while Ireland’s ISEQ Index increased 0.2 percent.
“Today’s session has turned on a sixpence after initially investors were jubilant that a deal had been struck to save Cyprus,” said Angus Campbell, head of market analysis at Capital Spreads. Investors have begun to question “what sort of precedent the whole debacle will set for the European sovereign debt crisis.”
Cyprus agreed to shrink its banking system, shutting the country’s second-largest bank, in exchange for 10 billion euros ($13 billion) of aid. The finance ministers of the 17-member euro area ratified the country’s accord with the troika of the European Central Bank, the European Commission and the International Monetary Fund.
Stocks erased their advance after Reuters reported that Dutch Finance Minister Jeroen Dijsselbloem, who chairs the meetings of euro-area finance ministers, said the Cypriot rescue plan may become a template for future bank bailouts.
Cypriot lawmaker Nicholas Papadopoulos, the chairman of the parliamentary finance committee, said his country must explore whether leaving the euro area would help its economy.
Barclays dropped 3.4 percent to 282.1 pence after earlier rallying as much 3 percent. RBS slid 2.1 percent to 287.2 pence and Lloyds Banking Group Plc, the U.K.’s largest mortgage lender, retreated 1.7 percent to 47.8 pence.
A gauge of U.K. lenders fell 1.1 percent, its longest stretch of losses since July 2010, as bond yields in Spain and Italy rebounded.
Vedanta fell 4.8 percent to 1,039 pence as copper erased its advance on the London Metal Exchange. Antofagasta Plc dropped 2.4 percent to 1,008 pence and Kazakhmys Plc tumbled 5.3 percent to 443.6 pence.
Vodafone climbed 2 percent to 187.2 pence, after the Sunday Times reported that the world’s second-largest mobile-phone operator has held talks to sell its stake in Verizon Wireless to Verizon Communications Inc. for $135 billion.
The discussions included the option of combining Vodafone and Verizon, according to the report, which cited unidentified bankers and investors.
ARM Holdings Plc increased 4.2 percent to 916 pence as Bank of America Corp. added the shares to its Europe 1 list.
Centrica Plc rose 1.3 percent to 362.1 pence after signing a 20-year deal to import natural gas from the U.S. The U.K.’s largest household energy supplier will buy 1.75 million metric tons a year of liquefied natural gas from Cheniere Energy Inc.’s Sabine Pass plant in Louisiana. The fuel will supply the equivalent of 1.8 million U.K. houses.
Avocet Mining Plc surged 9.3 percent to 20.5 pence after the gold producer secured a financing agreement with its biggest shareholder, Elliott Management, and Macquarie Bank Ltd.