U.K. Stocks Decline After Three-Day Gain; Intertek DropsAlexis Xydias
U.K. stocks fell as investors weighed valuations and awaited releases from central banks this week that may shed light on the path of monetary policy.
Intertek Group Plc, which offers product-inspection services, dropped 2.5 percent after reporting a slowdown in revenue growth. Smiths Group Plc, a maker of security scanners, declined 2.3 percent after it updated investors on its results. EasyJet Plc jumped 7.1 percent as Europe’s second-biggest discount carrier said it will pay an additional dividend after full-year profit increased 51 percent.
The FTSE 100 Index fell 25.45 points, or 0.4 percent, to 6,698.01 at the close of trading in London. The benchmark gauge has climbed 14 percent this year, reaching a valuation of 13.7 times the estimated earnings of its members, near the highest since 2009, according to data compiled by Bloomberg. The broader FTSE All-Share Index lost 0.4 percent today, and Ireland’s ISEQ Index slid 0.9 percent.
Stocks “are not overvalued nor incredibly attractive,” Patrick Armstrong, who helps oversee $200 million as chief investment officer at Armstrong Investment Managers in London, said by phone. “You could easily see a melt-up into year-end as exuberance kicks in and as people tend to position themselves positively. But also, there is no clear catalyst that could drive us higher from here. I don’t expect a big move.”
Investors tomorrow will scrutinize minutes from the most recent Federal Reserve and Bank of England meetings to assess the prospects for monetary-policy changes.
The Organisation for Economic Cooperation and Development cut its global growth forecasts for this year and next as emerging-market economies including India and Brazil cool. The world economy will probably expand 2.7 percent in 2013 and 3.6 percent in 2014, instead of the 3.1 percent and 4 percent predicted in May, the Paris-based OECD said in a semi-annual report today.
Intertek lost 2.5 percent to 3,102 pence. The company said revenue excluding acquisitions increased 3 percent in the July-to-October period, down from 6.3 percent in the first half. Goldman Sachs Group Inc. analysts reduced their earnings estimates for the company following the results, saying that growth “continues to slow.”
Smiths Group, which has climbed 20 percent this year, dropped 2.3 percent to 1,400 pence. The company said trading in the three months to Nov. 2 and its outlook for the year are in line with expectations. Smiths Group warned that foreign-exchange rates are a “headwind” that may affect earnings.
Shares of Paddy Power Plc plunged 8.1 percent to 57.44 euros in Dublin. Ireland’s biggest bookmaker fell the most in five years after saying that poor results from sports bets will reduce operating profit more than expected.
EasyJet rallied 7.1 percent, the biggest gain in the FTSE 100, to 1,345 pence after proposing to pay 44.1 pence a share, in addition to a regular dividend of 33.5 pence. Pretax profit for the 12 months to Sept. 30 rose to 478 million pounds ($770 million), topping the average analyst estimate in a Bloomberg survey and up from 317 million pounds a year earlier.
Enterprise Inns Plc jumped 12 percent to 154 pence. The second-biggest U.K. pub chain said Chief Operating Officer Simon Townsend will replace Chief Executive Officer Ted Tuppen next year. Tuppen, who was CEO for more than 20 years, will retire Feb. 6, the company said. Enterprise Inns has fallen more than 85 percent since May 2007.
Afren Plc, a U.K. energy explorer in Africa and Iraq, rose
8.1 percent to 161 pence after finding more oil off Nigeria than previously forecast. The company more than tripled its estimate of recoverable oil at the Ogo prospect, drilled with Optimum Petroleum Development Ltd. and Lekoil Ltd., to 774 million barrels from 202 million barrels.
Keller Group Plc, the builder that drilled foundations for the Chicago Trump Tower, rose 4.3 percent to 1,048 pence. The company forecast today full-year results “slightly above” the top end of current market estimates as trading in the four months through October has continued to improve.
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