Most U.K. Stocks Decline as Manufacturing Growth SlowsInyoung Hwang
Most U.K. stocks declined, with the FTSE 100 Index posting a fourth week of gains, after a report showed manufacturing growth in Europe’s third-largest economy expanded at a slower pace last month.
Royal Bank of Scotland Group Plc slid 7.5 percent after the state-owned lender said it will set up an internal bad bank for its toxic assets. Meggitt Plc plunged the most since September 2001 after cutting its sales forecast. Vodafone Group Plc rose to its highest price in 12 years after people familiar with the matter said AT&T Inc. has carried out internal work to prepare for a takeover of Europe’s biggest mobile-phone carrier.
The FTSE 100 rose 3.31 points, or 0.1 percent, to 6,734.74 at the close in London. Two stocks dropped for every one that climbed. The equity benchmark has advanced 0.2 percent this week. The broader FTSE All-Share Index was little changed today, while Ireland’s ISEQ Index decreased 0.3 percent.
“There may be some profit taking,” David Wartenweiler, chief investment officer at Habib Bank AG, said by telephone from Zurich. “The market has been strong in terms of momentum, so it would justify a bit of a setback. Earnings have been pretty good over the last couple of weeks, so now we have to see if there’s follow-through.”
The Markit Economics and Chartered Institute of Purchasing and Supply said their measure of Britain’s manufacturing industry slipped to 56 in October from a revised 56.3 in September. The median estimate of economists surveyed by Bloomberg had called for a reading of 56.4.
In the U.S., the Institute for Supply Management’s manufacturing index rose to 56.4 in October, its highest level since April 2011, from 56.2 a month in September. That beat the median forecast in a Bloomberg survey of 55. Readings above 50 mean that activity expanded.
In China, the official manufacturing gauge rose more than forecast to its highest level in 18 months. The purchasing managers’ index increased to 51.4 in October from 51.1 a month earlier, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a report. The median estimate in a Bloomberg survey of economists had called for a figure of 51.2. A PMI from HSBC Holdings Plc and Markit Economics also exceeded projections.
RBS retreated 7.5 percent to 340 pence. The lender forecast that it will post a full-year loss after transferring 38.3 billion pounds of its riskiest loans to the internal bad bank.
“We expect a significant increase in impairments in the fourth quarter of 2013 which is likely to result in the group reporting a substantial loss,” RBS said in a statement.
A gauge of U.K. banks declined for a third consecutive day, losing 0.2 percent. Barclays Plc, Britain’s second-biggest lender, fell 2.8 percent to 256.3 pence.
Meggitt tumbled 11 percent to 509 pence. The maker of wheels and brakes for aircraft said that sales will grow at a low single-digit rate this year. That compared with a previous forecast for a mid-single-digit increase.
Go-Ahead Group Plc dropped 3.3 percent to 1,626 pence. The rail company was cut to sell from neutral at UBS AG. The brokerage said that the U.K. market still struggles for growth.
Vodafone climbed 3.6 percent to 232.5 pence. The largest U.S. phone company has intensified work on which Vodafone assets it would keep after a takeover, the people said, declining to be identified discussing private deliberations. The two companies haven’t entered formal negotiations.
Exillon Energy Plc rallied 2.9 percent to 245 pence, its highest price since February 2012. The company, which drills for oil in Russia, may be an acquisition target, the Daily Mail reported. Exillon said on Sept. 18 that it will review its strategic options, including a potential sale of the business.
IP Group Plc added 2.7 percent to 151 pence. The company that develops new businesses based on discoveries at U.K. universities said in a statement that the fair value of its portfolio rose to 258.2 million pounds ($411 million) at the end of October from 191.9 million pounds at the end of June.