U.K. Stocks Retreat as China Industrial Output Declines
U.K. stocks declined, following two days of gains, as a slowdown in Chinese industrial production last month outweighed data showing U.K. output rose for a second month in October.
BHP Billiton Ltd. (BHP) and Vedanta Resources Plc retreated at least 2 percent, following a gauge of European commodity producers lower. TUI Travel Plc dropped 1.5 percent after predicting its first-half loss will widen this year. Smiths Group Plc climbed 1.5 percent as Morgan Stanley recommended buying shares in the maker of security scanners.
The FTSE 100 Index (UKX) slid 36.17 points, or 0.6 percent, to 6,523.31 at the close of trading in London, after earlier rising as much as 0.2 percent. The gauge fell 1.5 percent last week as better-than-estimated U.S. economic data spurred speculation that the Federal Reserve will begin cutting stimulus measures sooner than forecast. The FTSE All-Share Index fell 0.4 percent today, while Ireland’s ISEQ Index advanced 0.1 percent.
“Equities in London are tiptoeing between positive and negative territory with mineral extractors offside after mixed Chinese data,” said David Madden, a market analyst at IG Markets in London.
Chinese industrial output increased 10 percent in November from a year earlier, following a 10.3 percent gain in October, the National Bureau of Statistics said. That missed economists’ median projection of 10.1 percent in a Bloomberg survey. Retail sales advanced 13.7 percent.
U.K. industrial production expanded for a second month in October, the Office for National Statistics said today in London. Output gained 0.4 percent from September, when it increased 0.9 percent. That matched the median forecast of 30 economists in a Bloomberg News survey. Factory production also rose 0.4 percent, while oil and gas extraction fell 2.5 percent.
BHP Billiton and Vedanta Resources slid 2 percent to 1,807.5 pence and 2.1 percent to 804 pence, respectively. A gauge of European mining companies was among the worst performers of the 19 industry groups on the Stoxx Europe 600 Index.
TUI Travel (TT/) dropped 1.5 percent to 378.3 pence. Europe’s largest tour operator said it expects its first-half loss to widen this year due to a later Easter and forecast the French unit will break even in 2015.
The predictions came even as TUI said underlying operating profit rose 13 percent to 555 million pounds ($913 million) in the year ended September when adjusted for currency swings, beating a company forecast for at least an 11 percent gain.
Tullow Oil Plc (TLW) dropped 1.8 percent to 853.5 pence after Credit Suisse Group AG cut its price estimate for the driller focused on Africa and Latin America by 5.5 percent to 1,097 pence, saying the stock may not reflect the current market perception of risk to its value.
Smiths Group (SMIN) gained 1.5 percent to 1,399 pence. Morgan Stanley upgraded the shares to overweight, similar to a buy rating, from equal weight, saying the price doesn’t reflect potential returns on a steady-rate basis or from mergers and acquisitions. Smiths is trading at 13.5 times next year’s earnings, compared with 14.5 times for the Stoxx 600 Industrial Goods and Services Index, data compiled by Bloomberg show.
Prudential Plc added 1.7 percent to 1,287 pence. The insurer is targeting underlying free surplus generation of as much as 1.1 billion pounds in 2017 in Asia, with a goal to expand pretax operating profit for its life and asset management operations in the region by 15 percent a year, it said before a meeting of analysts and investors in London today. Prudential also wants to invest in Saudi Arabia after expanding into Poland and Cambodia.
Polymetal International Plc (POLY) climbed 1.4 percent to 514 pence. Billionaire Alexender Nesis’ Powerboom Investments Ltd. increased its stake in the Russian gold and silver miner to 72 million shares from 68.5 million, Polymetal said today.
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