Bloomberg News

U.K. Stocks Decline, Close at the Lowest Since January

March 29, 2012

U.K. stocks fell for a third day, with the FTSE 100 (UKX) Index closing at its lowest since January, after Standard & Poor’s said Greece may have to restructure its debt again.

FirstGroup Plc slumped the most since January 2009 after saying that it faced “challenging trading conditions” in its bus business. BP Plc (BP/) fell 2 percent as crude retreated. 3i Group Plc (III) gained 2.8 percent as Chief Executive Officer Michael Queen said he’ll step down after 25 years at the London-based private- equity firm.

The FTSE 100 dropped 66.96, or 1.2 percent, to 5,742.03 at the close in London, its lowest level since Jan. 31. The gauge has still rallied 3.1 percent this year, boosted by the European Central Bank’s 1 trillion euros ($1.3 trillion) in loans to the region’s financial institutions. The FTSE All-Share Index fell 1.2 percent, while Ireland’s ISEQ Index declined 1.6 percent.

“After such a strong quarter, this rally is ending with a whimper rather than a bang, perhaps understandably given the run up in global markets,” said Chris Beauchamp, a markets analyst at IG Index in London. “There is enough to keep investors on edge in advance of the European meeting in Copenhagen tomorrow,” he said referring to the meeting of euro-area finance ministers.

Greece will probably have to restructure its debt again and may have to involve bailout partners such as the International Monetary Fund, said Moritz Kraemer, head of sovereign ratings at S&P.

Greece’s Rescue

European governments are preparing for a one-year increase in the ceiling on rescue aid to as much as 940 billion euros to keep the debt crisis at bay, according to a draft statement written for finance ministers before they meet in Copenhagen. Germany’s Chancellor, Angela Merkel, this week gave her first indication that she is prepared to allow an increase in the firewall.

Stocks fell as the number of Americans seeking unemployment benefits last week topped economists’ estimates. Initial jobless claims fell 5,000 in the week ended March 24 to 359,000, the Labor Department reported today in Washington. The median forecast of economists in a Bloomberg News survey called for 350,000 claims. With the report, the government data also contained revisions dating back to 2007.

U.K. Bus Market

FirstGroup Plc (FGP) slumped 14 percent to 247.4 pence after predicting operating profit at its U.K. bus unit of about 8 percent of sales in the financial year ending in 2013. That compared with analysts’ estimates of about 12 percent, Bank of America Corp. said in a note today.

BP lost 2 percent to 458.9 pence. Royal Dutch Shell Plc (RDSA) retreated 1.1 percent to 2,191 pence. Crude declined, trading near its lowest close in almost a week in New York, after stockpiles surged in the U.S. and Western countries discussed tapping emergency reserves.

3i climbed 2.8 percent to 209.7 pence. Queen, who took up the job in January 2009, struggled to increase the pace of 3i’s investments, being hampered by the financial crisis and he euro- area debt crisis. One of the U.K.’s oldest private-equity investors, 3i lost its place in the FTSE 100 in September.

International Power Plc (IPR) surged 5.6 percent to 405 pence after saying that it received an indicative proposal of 390 pence per share from GDF Suez SA for the 30 percent stake in the company that Paris-based GDF does not already own.

Bwin.Party Digital Entertainment Plc soared 7 percent to 156.4 pence, the most since December, as full-year earnings before interest, taxes, depreciation and amortization topped estimates.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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


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