Bloomberg News

U.K. Stocks Drop on Moody’s Euro-Area Review; ENRC Leads Decline

December 13, 2011

Dec. 12 (Bloomberg) -- U.K. stocks declined for the third day in four as metal prices dropped and Moody’s Investors Service said it is reviewing all national credit ratings in the region following last week’s debt-crisis summit.

London Stock Exchange Group Plc slid 4.9 percent after Standard & Poor’s placed its credit rating on review for a potential downgrade. Eurasian Natural Resources Corp. led losses in the shares of mining companies.

The benchmark FTSE 100 Index fell 101.35, or 1.8 percent, to 5,427.86 at the close in London. The gauge rose on Dec. 9 after policy makers decided to channel as much as 200 billion euros ($265 billion) of central-bank loans through the International Monetary Fund to fight the debt crisis. The FTSE 100 has rebounded 10 percent from this year’s low on Oct. 4. The FTSE All-Share Index lost 1.9 percent today, while Ireland’s ISEQ Index retreated 0.9 percent.

“What’s pushing Europe down is Moody’s worrying after the debt summit and the rise in Italian 10-year yields,” said Magnus Dagel, an equity strategist at Nordea Bank AB in Stockholm.

Moody’s said it will review the ratings of all EU countries in the first quarter, saying the summit failed to deliver “decisive policy measures” to end the debt crisis.

ECB’s Role

Bundesbank President Jens Weidmann told the Frankfurter Allgemeine Sonntagszeitung that while the last weekend’s agreement among euro-area leaders represents “progress,” the onus is on governments rather than the ECB to resolve the crisis. Separately, German Finance Minister Wolfgang Schaeuble said policy makers will now focus on implementing the accord to strengthen budget rules as quickly as possible.

China’s export growth slowed in November to the weakest since 2009. Overseas shipments rose 13.8 percent from a year earlier, the customs bureau said on Dec. 10. The trade surplus shrank by 35 percent.

Copper declined as much as 2.6 percent on the London Metal Exchange on speculation that a slowdown in China’s industrial output will increase stockpiles.

Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, fell 5.9 percent to 1,156 pence. Vedanta Resources Plc, the biggest miner of the metal in India, retreated 4.2 percent to 1,065 pence.

London Stock Exchange

LSE dropped 4.9 percent to 780 pence. The equity-market operator that also owns a clearinghouse in Italy may have its credit rating cut by S&P because Italian banks’ finances are deteriorating.

The exchange “is materially exposed to unsecured credit risk to Italian banks,” New York-based S&P said in a report today. “The creditworthiness of these counterparts has been deteriorating over the past several months.”

Separately, the exchange agreed to buy the 50 percent of FTSE International Ltd. that it doesn’t already own from Pearson Plc for 450 million pounds ($702 million).

ENRC dropped 7.4 percent to 634.5 pence. The company denied a newspaper report that the U.K. Serious Fraud Office has launched a formal corruption investigation into the company. The Sunday Times had said the watchdog had started such an inquiry and that ENRC had been told to hand over details of an investigation into operations in Kazakhstan and the Democratic Republic of Congo.

“The internal audit committee investigations and liaison with appropriate regulators, including the SFO, is entirely normal practice for a major company that is serious about investigating all allegations properly and striving to meet corporate governance best practice,” ENRC spokeswoman Charlotte Kirkham said in an e-mail.

Lloyds Banking group Plc tumbled 8.6 percent to 24.43 pence as a gauge of British banks fell 3.7 percent. Royal Bank of Scotland Group Plc. slipped 6.5 percent to 20.56 pence.

--Editors: Srinivasan Sivabalan, Andrew Rummer

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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