Bloomberg News

U.K. Stocks Fall for a Second Day, Led by Essar, HSBC

February 27, 2012

U.K. (UKX) stocks fell after the Group of 20 nations rebuffed calls from euro-area leaders to boost the International Monetary Fund’s resources to contain the region’s sovereign-debt crisis.

Essar Energy Plc dropped 15 percent, to a record low, as the Indian power producer and oil refiner reported a loss in 2011. HSBC (HSBA) Holdings Plc slipped 3.7 percent as pretax profit missed analyst estimates. BP Plc rose to a 13-month high as it was said to be in talks for a settlement of claims over the Gulf of Mexico oil spill.

The benchmark FTSE 100 Index slid 19.58, or 0.3 percent, to 5,915.55 at the close in London. The measure has still rallied 20 percent from its low in October as the European Central Bank increased lending to banks and U.S. economic reports exceeded forecasts. The FTSE-All Share Index retreated 0.4 percent today. Ireland’s ISEQ Index slipped 0.2 percent.

“Any offers of new IMF money appear to hinge on Europe doing more in its own right to deal with the problems on its own doorstep,” said Michael Hewson, a markets analyst at CMC Markets in London. “The IMF has already hinted that its own contribution to the Greek bailout cannot be taken for granted if Germany continues to prevaricate about increasing the size of the firewall.”

G-20 officials told the euro area’s political leaders to come up with more money before they can consider lending outside support. They put the onus on Germany, already the biggest national contributor to the bailouts, to increase rescue efforts.

Essar, HSBC

Essar Energy (ESSR) declined 15 percent to 107.6 pence. The company said it made a loss after tax of $568.2 million in 2011 after the Supreme Court of India set aside a sales-tax deferment decision.

HSBC, Europe’s largest bank, slid 3.7 percent to 553.5 pence after reporting a 15 percent increase in pretax profit to $21.9 billion last year. That missed the $22.3 billion median analyst estimate. Chief Executive Officer Stuart Gulliver told reporters the lender remained “confident” of hitting its 12 percent return-on-equity target by 2013.

Return on equity and costs as a proportion of revenue both missed the lender’s own targets. HSBC is withdrawing from less profitable markets and shrinking its U.S. division after setting aside more than $65 billion for bad loans in North America.

AB Foods, Bovis

Associated British Foods Plc (ABF), the U.K. sugar producer that owns Primark clothing stores, slid 1.6 percent to 1,200 pence. The company said first-half profit will top the performance last year on higher profit from its sugar business.

BP climbed 1.1 percent to 501.7 pence, the highest since Jan. 21, 2011. BP and plaintiffs suing over the 2010 Gulf of Mexico oil spill are discussing a $14 billion accord that would be funded with money originally set aside by the company for out-of-court settlements, according to three people familiar with the talks.

Cookson Group Plc (CKSN) rose 2.2 percent to 685 pence after reporting earnings and sales for 2011 that beat estimates and announced a dividend ahead of forecasts.

Bunzl Plc (BNZL) advanced 2.3 percent to 952 pence as full-year revenue, excluding acquisitions, rose at the fastest rate since 2006. Numis raised the stock to “add” from “hold.”

To contact the reporter on this story: Adam Haigh in London at

To contact the editor responsible for this story: Andrew Rummer at

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