U.K. Stocks Retreat as Xstrata Leads Mining Stocks Lower; Wellstream Soars
U.K. stocks declined, reversing earlier gains on the FTSE 100 Index in the final 15 minutes of trading, amid concern the Federal Reserve may highlight how the recovery for the world’s largest economy is stagnating.
Xstrata Plc led a retreat among mining companies as metals prices declined in London. Cairn Energy Plc climbed 2.3 percent after saying an exploration well being drilled in Greenland has found its first pockets of oil as well as gas. Wellstream Holdings Plc surged 29 percent as it received a number of preliminary takeover approaches.
The benchmark FTSE 100 Index lost 26.35, or 0.5 percent, to 5,577.19 at the 4:30 p.m. close in London, paring yesterday’s 1.7 percent rally. The FTSE All-Share Index gained 0.4 percent and Ireland’s ISEQ Index rose 0.6 percent today.
“There is much anticipation that the Fed is considering further stimuli for what is appearing to be an increasing struggling U.S. recovery,” said Giles Watts, the head of equities at City Index Ltd. in London. “Investors seem reassured by recent gains in the markets but as we have seen over recent months, optimism can turn bearish very quickly, and any more worrying noise from the U.S. could be the catalyst.”
Fed policy makers are meeting today to consider whether new measures to boost economic growth are needed. The FTSE 100 has rallied 17 percent from this year’s low in July as concern eased that efforts by European nations to slash budget deficits will stifle economic growth.
Britain posted the largest budget deficit for any August since records began in 1993, underscoring the challenge facing the coalition government as it tries to cut record borrowing.
Three out of five global investors say the world economy has weathered the financial crisis and has stabilized two years after the collapse of Lehman Brothers Holdings Inc. Few believe the economy is recovering, with only one in six of those surveyed describing it as expanding, according to a global quarterly poll of 1,408 investors, analysts and traders who are Bloomberg subscribers. Forty-one percent aren’t convinced the financial situation is stable and say further turbulence is likely.
Basic resources shares declined. Xstrata dropped 2 percent to 1,167.5 pence. Eurasian Natural Resources Corp. lost 2.7 percent to 889.5 pence. Copper, nickel, tin and zinc prices retreated on the London Metal Exchange.
Cairn Energy climbed 2.3 percent to 436.5 pence as it said an exploration well being drilled in Greenland has found its first pockets of oil and gas.
“The presence of both oil and gas confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign for the Sigguk block and the entire area,” according to Bill Gammell, Cairn’s chief executive officer, who commented in a Regulatory News Service statement today.
Wellstream soared a record 29 percent to 785 pence as the company said it received a number of preliminary approaches regarding a possible offer for the company.
“There can be no certainty that an acceptable offer will ultimately be made,” the company wrote in the statement today.
Biocompatibles International Plc surged 7.8 percent to 353 pence. The drugmaker said it has received a “preliminary approach” that may lead to an offer being made for the company.
Dolphin Capital Investors Ltd. gained 7.3 percent to 36.75 pence. The developer of holiday resorts in southeastern Europe said its first-half loss narrowed to 8.4 million euros from 93.9 million euros a year earlier as its properties increased in value.
To contact the editor responsible for this story: David Merritt at firstname.lastname@example.org.