U.K. Stocks Decline From a Two-Week High as RBS RetreatsJonathan Morgan
U.K. stocks declined from a two-week high as Royal Bank of Scotland Group Plc dropped after its U.S. subsidiary failed the Federal Reserve’s stress test.
RBS slipped 1.4 percent as the Fed rejected RBS Citizens Financial Group Inc.’s capital plan. Babcock International Group Plc dropped 6.7 percent after agreeing to buy Avincis Group for 920 million pounds ($1.5 billion) from its private-equity owners. Tullow Oil Plc fell 2.3 percent after saying an exploration well in Kenya failed to find viable deposits of oil.
The FTSE 100 Index lost 16.98 points, or 0.3 percent, to 6,588.32 at the close in London, extending the decline from its high on Feb. 24 to 4 percent. U.K. stocks have dropped 2.4 percent this year, the second-worst performance by a developed market in Europe. The broader FTSE All-Share Index also fell 0.3 percent today, while Ireland’s ISEQ Index slipped 0.4 percent.
“There is some weakness in the banks after the U.S. units of the likes of RBS and HSBC failed a Federal Reserve stress test,” Richard Hunter, head of equities at Hargreaves Lansdown Plc in London, wrote in an e-mail. “RBS came under particular pressure, since the test results could jeopardize or at least hamper its sale of that unit.”
RBS lost 1.4 percent to 301.9 pence. The U.S. central bank identified qualitative flaws in RBS Citizens’ capital plan.
HSBC Holdings Plc retreated 0.5 percent to 608.3 pence after Europe’s largest bank said its North American business will have to resubmit its capital plan for the Fed’s 2014 Comprehensive Capital Analysis and Review.
Babcock declined 6.7 percent to 1,275 pence. The engineering-services company said in a statement that it will take on 705 million pounds of Avincis’s debt as part of the deal to buy the helicopter business from Investindustrial and Kohlberg Kravis Roberts & Co. Babcock said it will raise 1.1 billion pounds in a rights issue to fund the acquisition.
Tullow Oil slipped 2.3 percent to 759 pence after saying “the well encountered poorly developed oil-bearing reservoir sands.” The exploration company still plans to sell its first oil from Kenya as early as 2016.
SSE Plc dropped 2 percent to 1,487 pence after Ofgem, Britain’s energy regulator, asked the Competition and Markets Authority to investigate the retail market for electricity and gas. The CMA could force the largest utilities to break up.
Randgold Resources Ltd., a gold miner in Africa, slipped 2.7 percent to 4,486 pence. Fresnillo Plc, which produces gold and silver in Mexico, retreated 4 percent to 837.5 pence. Gold fell to the lowest price in six weeks.
In the U.S., the Commerce Department revised upwards its estimate for economic growth in the final three months of last year. A release showed gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter. The Commerce Department had said the world’s biggest economy expanded at a 2.4 percent pace.
Separate data from the Labor Department showed that initial jobless claims unexpectedly dropped to 311,000 in the week ended March 22 from a revised 321,000 in the preceding period.