U.K. Stocks Retreat for Third Day as Tullow, EasyJet DropInyoung Hwang
U.K. stocks fell for a third day as declines in Tullow Oil Plc and EasyJet Plc outweighed comments by China’s Premier Li Keqiang that the world’s second-largest economy will grow by at least 7 percent.
Tullow tumbled 6.6 percent after the energy explorer failed to find commercial quantities of crude or gas at two wells in Mozambique and French Guiana. EasyJet sank 3.7 percent as HSBC Holdings Plc cut its recommendation on the discount airline to neutral from overweight. Glencore Xstrata Plc advanced 5.1 percent as mining companies rallied.
The FTSE 100 Index fell 25.73 points, or 0.4 percent, to 6,597.44 at the close of trading in London, erasing earlier gains. The gauge has slipped 0.6 percent in the past three trading sessions, trimming its year-to-date rally to 12 percent. The FTSE All-Share Index decreased 0.3 percent today, while Ireland’s ISEQ Index declined 0.6 percent.
Investors are “likely to be sitting on the sidelines as the earnings season goes at full pelt,” Brenda Kelly, a market strategist at IG in London, wrote in e-mailed comments. “Despite the deluge of royal-baby related optimism and the boost from Beijing, the FTSE 100 still lacks the impetus to break and close above the 6,650 level.”
The FTSE 100 has fallen 3.6 percent from the 13-year high high of 6,840.27 reached on May 22. The volume of shares changing hands was 13 percent less than the 30-day average today, data compiled by Bloomberg show.
Fourteen companies in the FTSE 100 will report results this week, according to data compiled by Bloomberg. ARM Holdings Plc and GlaxoSmithKline Plc will release results tomorrow, Unilever and BT Group Plc on July 25 and British Sky Broadcasting Group Plc on July 26.
The FTSE 100 climbed as much as 0.5 percent earlier today after Beijing News reported that Li’s government sees 7 percent growth as the bottom line for tolerance of an economic slowdown, signaling the nation will act to support expansion if needed. Growth below 7 percent won’t be accepted because China needs to achieve a moderately prosperous society by 2020, according to July 21 commentary published by the official Xinhua News Agency.
“We’re a little more skeptical, but the initial knee-jerk reaction by the market is that this is bullish,” Howard Jones, a London-based partner at RMG Wealth Management LLP in London, which oversees $100 million, said by telephone.
Tullow tumbled 6.6 percent to 1,041 pence. The Cachalote well in the Ibo High area off Mozambique discovered a “gas bearing reservoir” that “is unlikely to be commercial on a standalone basis,” the company said in a statement. The GM-ES-4 well targeting the Cebus prospect off French Guiana revealed “no indications of hydrocarbons,” Tullow said.
EasyJet sank 3.7 percent to 1,336 pence. HSBC analyst Andrew Lobbenberg lowered his recommendation on the discount airline to neutral from overweight, saying in his note the “heatwave in northern Europe” will mean weakened demand for beach routes.
Imagination Technologies Group Plc plunged 11 percent to 250.7 pence, the lowest price in three years, as Samsung Electronics Co. said its new Exynos application processor will use ‘Mali’ graphics technology from ARM. ARM shares slipped 0.9 percent to 898 pence.
STMicroelectronics NV, Intel Corp.’s biggest competitor in Europe, sank 11 percent in Milan trading after reporting a seventh consecutive quarter of net losses.
Beazley Plc slid 7 percent to 225.7 pence. The Lloyd’s of London insurer posted a 27 percent decline in first-half pretax profit as returns from bond investments declined.
Basic-resources producers posted the biggest gain out of 19 industry groups in the Stoxx Europe 600 Index. Glencore advanced 5.1 percent, the most in the FTSE 100, to 282.7 pence. Metals and oil producer Vedanta Resources Plc climbed 3.3 percent to 1,164 pence. BHP Billiton Ltd. added 2 percent to 1,913 pence, while Anglo American Plc climbed 2.1 percent to 1,435 pence.
Rio Tinto Group rallied 3.4 percent to 3,000 pence. The world’s second-largest mining company said construction of an iron-ore project in Koodaideri, Australia, will begin in the third quarter of 2014. The mine may produce 70 million tons of ore a year, according to Rio.
Sage Group Plc added 1.8 percent to 359 pence. The U.K.’s largest software maker said that since April, trading remains in line with forecasts. The “good performance” in the U.K. and Ireland for the first half of the year is continuing into the third quarter, with business in mainland Europe “resilient” amid weak market conditions.
Premier Foods Plc rallied 6.2 percent to 90.25 pence. The owner of the Hovis bread and Bisto gravy brands said in a statement today that full-year trading profit will be around the top end of analysts’ projections.