Bloomberg News

U.K. Stocks Decline as Mining Companies Retreat; ENRC Sinks

June 10, 2011

June 10 (Bloomberg) -- U.K. stocks dropped to a 2 1/2-month low, led by selloff in mining companies as concern the global economy is slowing hurt metal prices and Eurasian Natural Resources Corp. was reported to have lost a third director.

ENRC, a producer of metals in Kazakhstan, tumbled 7 percent. Lonmin Plc retreated 5.4 percent after the world’s third-largest platinum producer cut its sales guidance. AstraZeneca Plc slid 2.1 percent after Barclays Plc downgraded Britain’s second-biggest drugmaker.

The benchmark FTSE 100 Index sank 90.54, or 1.6 percent, to 5,765.8 at the 4:30 p.m. close in London. The gauge has fallen for three consecutive weeks as U.S. economic data trailed forecasts, adding to speculation the economic recovery is faltering. The FTSE All-Share Index slid 1.5 percent today, while Ireland’s ISEQ Index fell 1.3 percent.

“Sentiment is not great the moment,” said Kishan Mandalia, a sales trader at City Index in London. “The dollar is gaining ground which is pushing commodity prices lower and is weighing massively on the miners. In the short term we could see a bounce from here as a lot of the heavy selling has been done.”

A report today showed U.K. manufacturing fell more than economists forecast in April, dropping 1.5 percent from the previous month. That was the most since January 2009. The median economist forecast was for a 0.1 percent decline.

ENRC, which earlier in the week voted against rehiring independent directors Richard Sykes and Kenneth Olisa, retreated 7.5 percent to 742 pence.

ENRC Report

The Financial Times reported that Mehmet Dalman, also an independent director, is resigning his seat on the board over concerns about corporate governance at the company. The newspaper cited two people close to the situation.

Lonmin declined 5.4 percent to 1,460 pence after the company said it has reduced its sales guidance for the 12 months to Sept. 30 to about 720,000 ounces of platinum.

UBS AG rated the platinum producer a “sell” in new coverage with a 12-month price estimate of 1,500 pence.

Anglo American Plc lost 3.3 percent to 2,891 pence as copper fell for a third day in New York and gold tumbled the most in four weeks. Vedanta Resources Plc slid 3.3 percent to 1,977 pence and Xstrata Plc fell 2.3 percent to 1,333 pence.

AstraZeneca fell 2.1 percent to 3,108 pence after Barclays lowered its recommendation for the drugmaker to “underweight” from “overweight,” citing concerns about Crestor, the company’s best-selling medicine last year.

Crestor Share

“We believe that Crestor’s market share is weakening in the U.S,” analysts wrote in a report to clients today. “With the decline expected to steepen through 2012, our earnings per share estimates are 7 percent below consensus in 2013.”

Home Retail Group Plc retreated 5.2 percent to 165.5 pence, extending its selloff this week to 22 percent. The retailer yesterday said a slump in first-quarter sales of televisions and video games led the company to cut the annual revenue forecast for its U.K. Argos chain.

Hays Plc rallied 2.9 percent to 109.2 pence after the Daily Mail reported that Adecco SA may be preparing a cash bid of 2.2 billion pounds ($3.6 billion), or 160 pence per share. The newspaper didn’t say where it got the information.

Stephan Howeg, a spokesman for Glattbrugg, Switzerland- based Adecco, reiterated the world’s largest supplier of temporary workers may spend as much as 150 million euros ($217 million) on “bolt-on” acquisitions.

Bellway jumped 2.7 percent to 716 pence after the second- worst performing U.K. homebuilder in the past 12 months said sales and visitor levels rose as demand increased in and around London. Weekly sales in the four months through May rose 9 percent from a year earlier while average prices gained 4 percent.

-- With assistance from Julie Cruz in London. Editor: Andrew Rummer

To contact the reporter on this story: Sarah Jones at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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