U.K. Stocks Decline for Second Day Amid Scotland Concern

U.K. stocks fell, dragged by financial companies, after a poll showed for the first time that a majority of voters favor independence for Scotland.

Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, the U.K. banks that lend the most in Scotland, dropped more than 1.3 percent each. Insurer Standard Life Plc, based in Edinburgh, lost 2.4 percent.

The FTSE 100 Index slipped 20.33 points, or 0.3 percent, to 6,834.77 at the close in London, paring an earlier drop of as much as 1.2 percent. An index measuring FTSE 100 volatility expectations surged 22 percent, the biggest jump since March.

“There’s a lot of uncertainty about Scotland because the nature of independence isn’t clear,” said Gerard Lane, a strategist at Shore Capital Group Ltd. in Liverpool, England. “The big question for RBS and Lloyds is whether they can still have access to the Bank of England as a lender of last resort if Scotland becomes independent. And if they want to relocate to England, will financial regulation allow them to? For companies that have tangible assets in Scotland, it could be a negative.”

A YouGov Plc poll for the Sunday Times showed the number of voters supporting the Scottish independence rose to 51 percent from 47 percent, while those on the No side dropped to 49 percent from 53 percent, with undecided voters excluded.

The volume of FTSE 100 shares changing hands was 32 percent greater than the 30-day average today, data compiled by Bloomberg show. The broader FTSE All-Share Index declined 0.4 percent, while Ireland’s ISEQ Index slipped 0.9 percent.

14-Year High

U.K. stocks are falling after a four-week rally that brought the FTSE 100 near a 14-year high. The gauge closed at 6,877.97 on Sept. 4, the highest level since May and less than 1 percent away from the record reached in December 1999.

Still, this year’s 1.6 percent gain through the end of last week is smaller than the 5.9 percent increase in the Stoxx Europe 600 Index, and traders have been taking precautions. The cost of options hedging against losses in the FTSE 100 is at a two-year high relative to bullish bets.

Today’s decline in RBS and Lloyds helped send a gauge of banks in the FTSE 350 Index down 0.4 percent. RBS dropped 1.3 percent to 342.5 pence, and Lloyds retreated 2.4 percent to 72.2 pence. Standard Life lost 2.4 percent to 406.4 pence.

Associated British Foods Plc also contributed to the slide in the FTSE 100 today. The stock declined 5.2 percent to 2,757 pence after reporting sales growth at its Primark budget fashion unit that missed estimates. The sugar and ingredient company said low sugar prices will hurt earnings.

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