U.K. Stocks Retreat as Russia Authorizes Force in UkraineNamitha Jagadeesh
U.K. stocks declined the most in a month after Russia’s parliament granted President Vladimir Putin the authority to use military force in Ukraine.
Aberdeen Asset Management Plc and Ashmore Group Plc each slid more than 3 percent as shares in financial-services companies dropped. GKN Plc retreated 3.1 percent as UBS AG lowered its recommendation on the engineering company. Randgold Resources Ltd. climbed 4.3 percent.
The FTSE 100 Index lost 101.35 points, or 1.5 percent, to 6,708.35 at the close in London as Ukraine’s navy chief said that gunmen had surrounded military facilities in the region of Crimea. The broader FTSE All-Share Index slid 1.6 percent, while Ireland’s ISEQ Index tumbled 2.3 percent.
“There is increased uncertainty, given the situation in Crimea,” Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England, said by phone. “It looks like, at the pain of some diplomatic telling off, Putin may gain access to the ports in the first step, and take back Crimea in the second step. There’s some risk aversion because of the small chance of a horrific event, like if someone in the West decides to take on Putin militarily.”
Putin won approval from lawmakers on March 1 to deploy troops in Ukraine. Russian-speaking forces subsequently arrived outside the Ukrainian infantry base at Privolnoye on the Crimean peninsula. Gunmen seized control of government buildings and airports in Crimea, where the majority of people speak Russian, at the end of last week. Crimea’s parliament agreed on Feb. 27 to hold a referendum on the territorial status of the region.
Aberdeen Asset Management and Ashmore, which both invest in emerging markets, dropped 4.3 percent to 373.7 pence and 3.2 percent to 306.5 pence, respectively. A gauge of London-listed financial-services stocks slid 3 percent.
U.S. Secretary of State John Kerry discussed using sanctions against Russia and Poland’s president called for the European Union to impose its own penalties. The 28-member EU bought almost half of Russia’s exports in 2012, according to the International Monetary Fund.
British American Tobacco Plc fell 1.2 percent to 3,210.5 pence. Morgan Stanley estimated that the company generated 10 percent of its revenue from Russia in 2013.
ITE Group Plc tumbled 13 percent to 244.8 pence. The London-listed organizer of exhibitions and conferences earned 63 percent of its sales from Russia last year, according to data compiled by Bloomberg.
GKN declined 3.1 percent to 393 pence after UBS downgraded the supplier of aircraft parts to neutral from buy. The brokerage said that the strengthening of the pound against the currencies that generate GKN’s revenue will lower profits.
Rio Tinto Group retreated 2.4 percent to 3,350.5 pence after Citigroup Inc. reduced its price estimate for the world’s second-largest mining company to 3,950 pence from 4,200 pence. The brokerage forecast lower iron-ore prices in 2014 and 2015 than it previously projected.
Smiths News Plc slid 14 percent to 177.8 pence after saying that its Bertram Books division made less profit in the six months ended Feb. 28 than a year ago because of competition on price and a mix of low-margin product categories.
Randgold gained 4.3 percent to 4,953 pence as gold climbed 2.1 percent to its highest price in four months.
Amlin Plc advanced 2.8 percent to 462.4 pence after the insurer reported pretax profit of 325.7 million pounds ($545 million) for 2013. That exceeded the 307.7 million-pound average of analyst estimates compiled by Bloomberg.