Bloomberg News

U.K. Stocks Slide for Fourth Day; Banks, Miners Lead Decline

October 03, 2011

Oct. 3 (Bloomberg) -- U.K. stocks declined for a fourth day, their longest falling streak in eight weeks, as commodity and bank shares slid due to concern that the global economy is faltering and the Greek debt crisis is deepening.

BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, retreated 1.6 percent and 2.4 percent respectively as copper slid to a 14-month low in London. Standard Chartered Plc and Royal Bank of Scotland Group Plc fell more than 4 percent as euro-area finance ministers meet to decide whether Greece will receive another aid tranche.

The benchmark FTSE 100 Index retreated 52.98 points, or 1 percent, to 5,075.5 at the 4:30 p.m. close in London after earlier declining as much as 2.8 percent. The index rose 1.2 percent last week as policy makers increased their efforts to contain the euro area’s sovereign-debt crisis. The gauge lost 14 percent in the third quarter, its biggest drop since 2002, amid concern that Greece’s debt woes will spread to other countries in the region and that the economy is stalling.

The broader FTSE All-Share Index also decreased 1 percent today, while Ireland’s ISEQ Index advanced 0.5 percent.

“It’s Greece, Greece and then some more Greece,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen. “European finance ministers are deciding today on whether Greece should get its next tranche of fiscal aid. Commodities are falling as fears spread the European crisis will really hurt global growth.”

Euro-Area Meeting

The ministers gathering in Luxembourg today will grapple with how to shield banks from the debt crisis and will consider a further boost to the region’s rescue fund. The Greek government said the country’s cabinet approved 6.6 billion euros ($8.8 billion) of austerity measures last night as part of efforts to secure a pending aid payment needed to avoid default.

U.K. stocks pared losses as a gauge of U.S. manufacturing unexpectedly rose, easing concern the world’s largest economy is stalling. The Institute for Supply Management’s factory index climbed to 51.6 last month from 50.6 in August, the Tempe, Arizona-based group said. A level of 50 is the dividing line between growth and contraction.

Manufacturing in the U.K. unexpectedly increased in September from a 26-month low as producers attempted to clear backlogs of orders and companies launched new products and advertising campaigns. An index based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, rose to 51.1, the highest reading in three months, from a revised 49.4 in August.

The median forecast of 28 economists in a Bloomberg News survey called for the measure to fall to 48.5 from an initially reported 49. A level above 50 indicates expansion.

BHP Billiton, Rio Tinto

The world’s two biggest miners, BHP Billiton and Rio Tinto, fell 1.6 percent to 1,710 pence and 2.4 percent to 2,819.5 pence respectively. A gauge of miners listed in London slipped 1.7 percent as copper fell to its lowest since July 2010 on the London Metals Exchange.

Randgold Resources Ltd., the St. Helier, Jersey, Channel Island-based goldminer, gained 3.7 percent to 6,520 pence as gold advanced. Fresnillo Plc, a Mexican silver and goldminer, rose 1.1 percent to 1,604 pence.

The Bank of England’s Financial Policy Committee said it would be “inappropriate” for banks to reduce capital and liquidity levels to stimulate credit supply as members discussed measures to boost financial stability.

“By reducing ratios at a time of elevated risks, market participants might well come to see banks as being more fragile, and they might interpret regulatory advice to cut buffers as a signal that banks were more fragile than previously had been thought,” it said in the minutes of its Sept. 20 meeting published in London today.

RBS, Barclays Fall

A gauge of U.K. banks declined 2.8 percent. Standard Chartered declined 4.5 percent to 1,229.5 pence, Royal Bank of Scotland slid 4.4 percent to 22.46 pence and Barclays Plc fell 3.2 percent to 156.25 pence.

Aviva Plc, the second-biggest U.K. insurer, declined 5.5 percent to 288.6 pence after Taipei-based Commercial Times reported Aviva may cut its stake in its insurance joint venture with First Financial Holding to less than 10 percent from 49 percent.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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