Bloomberg News

U.K. Stocks Decline for Second Day on Economy; Weir Slides, Misys Gains

March 05, 2012

U.K. stocks had the biggest two-day decline since January as China reduced its economic-growth target and euro-area services and manufacturing output fell more than expected.

Glencore International Plc led mining stocks lower after reporting a drop in earnings. Weir Group Plc, the world’s biggest maker of pumps for the mining industry, retreated after Citigroup Inc. advised selling the shares. BP Plc advanced 1.6 percent after reaching a settlement with victims of the 2010 Deepwater Horizon oil-rig disaster.

The benchmark FTSE 100 Index (UKX) decreased 36.31, or 0.6 percent, to 5,874.82 at the close in London, bringing its two- day slide to 1 percent. The gauge has still rallied 5.4 percent this year as the European Central Bank lent more than 1 trillion euros ($1.3 trillion) for three years to the region’s banks to ease liquidity. The broader FTSE All-Share Index (ASX) sank 0.7 percent today and Ireland’s ISEQ Index fell 1.2 percent.

“There is a big concern about growth,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “Growth is anemic. The market has advanced a lot recently and the potential for more gains is limited. It’s logical that investors are locking in profits.”

China reduced its growth target to 7.5 percent this year, the lowest goal since 2004, according to a state-of-the-nation speech that Premier Wen Jiabao delivered to about 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing today. The government had had an 8 percent goal in place since 2005.

Euro-Area Economy

European services and manufacturing output shrank more than estimated in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers dropped to 49.3 from 50.4 in January, Markit Economics said. That’s below an initial figure of 49.7 published on Feb. 22. A reading below 50 indicates contraction.

Stocks extended losses after Greek Finance Minister Evangelos Venizelos said the country is ready to force a debt restructuring plan on bondholders if necessary. The success of the 106 billion-euro debt swap depends on how many investors agree to the writedown by the March 8 deadline.

In the U.S., the Institute for Supply Management’s non- manufacturing report showed its employment gauge fell to 55.7 in February from 57.4 in the prior month.

Glencore Drops

Glencore (GLEN), the world’s largest publicly traded commodities supplier, retreated 4 percent to 403.35 pence. Net income excluding exceptional items in the six months ended Dec. 31 was $1.61 billion, the Baar, Switzerland-based company said. That compares with $2.28 billion a year earlier.

Separately, Glencore said it was told to halt production from a plant at its Mopani copper operation in Zambia by the state environmental agency.

Chief Executive Officer Ivan Glasenberg said the company’s 23 billion-pound ($36.3 billion) all-share offer for Xstrata Plc (XTA) is a “fair price,” rebuffing calls from some investors to raise the bid. Xstrata declined 4.9 percent to 1,137.5 pence.

Kazakhmys Plc (KAZ), Kazakhstan’s biggest copper producer, lost 4.9 percent to 951.5 pence. The stock was cut to “neutral” from “overweight” at HSBC Holdings Plc, which said that its rally so far this year leaves it with less potential for gains.

Fresnillo Plc (FRES), which produces silver and gold, retreated 3.4 percent to 1,832 pence. Copper, silver and gold fell in London trading.

Weir Downgrade

Weir sank 4.7 percent to 1,939 pence as the stock was cut to “sell” (WEIR) from “neutral” at Citigroup.

BP climbed 1.6 percent to 504.6 pence. Europe’s second- biggest oil producer struck a deal with businesses and individuals that was lower than the $14 billion that had been discussed, according to people familiar with the talks. BP (BP/)’s Chief Financial Officer, Brian Gilvary, said that the company is prepared to settle with the U.S. government for penalties under the Clean Water Act if the terms are fair.

Dunelm Group, a U.K. retailer of budget home furnishings, slid 5.1 percent to 482.8 pence. Executive Deputy Chairman Will Adderley and his wife sold 7.5 million shares at 480 pence apiece. Adderley is the son of the company’s founders.

Amlin Plc (AML) retreated 4.4 percent to 336 pence as the largest Lloyd’s of London insurer by market value posted a bigger-than- estimated annual loss after the worst year for natural disasters on record.

Serco Sinks

Serco Group Plc (SRP), which provides outsourcing to governments, lost 5.9 percent to 527 pence as Bank of America Corp. downgraded the stock to “neutral” from “buy.”

Misys Plc (MSY) jumped 6 percent to 335 pence. CVC Capital Partners Ltd. and ValueAct Capital are working on a joint cash offer for Misys, increasing the number of suitors for the British software company. Misys said it’s also still in talks with Temenos Group AG and Vista Equity Partners and that it has formed an independent committee of board directors to consider all offers.

Intertek Group Plc (ITRK) advanced 2.5 percent to 2,372 pence. The world’s biggest consumer-goods testing company said it expects high single-digit organic growth in 2012.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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