Bloomberg News

U.K. Stocks Drop as Standard Chartered, Home Retail Fall

May 02, 2012

U.K. stocks declined the most in more than a week as a contraction in euro-region manufacturing added to signs that the economic slump in Britain’s largest export market is worsening.

Standard Chartered Plc (STAN) led banks lower, retreating 3.9 percent. Home Retail Group Plc (HOME) tumbled 13 percent after reporting a 60 percent slump in profit. British Sky Broadcasting Group Plc (BSY) paced advancing shares after operating earnings jumped 20 percent.

The FTSE 100 (UKX) Index lost 54.12, or 0.9 percent, to 5,758.11 at the close in London. The gauge jumped 1.3 percent yesterday, its biggest rally since April 17 as gauge of U.S. manufacturing expanded at the fastest pace in 10 months. The FTSE All-Share Index declined 0.8 percent today and Ireland’s ISEQ Index slipped 0.1 percent.

“We have seen some of yesterday’s enthusiasm wane today, but there is still an appetite for risk out there,” said David Jones, chief market strategist at IG Index in London. “Some of the data coming out of Europe is a concern and raises the question of how long the European economy will take to get on a firmer footing; it can’t just be the U.S. driving growth.”

A report today showed manufacturing in the euro area shrank for a ninth month in April. A factory gauge based on a survey of purchasing managers slipped to 45.9 from 47.7 in March, according to London-based Markit Economics. That’s the lowest in 34 months and compares with an estimate of 46 published on April 23. A reading below 50 indicates contraction.

German Unemployment Climbs

German unemployment unexpectedly rose for the first time in six months in April. The number of people out of work increased a seasonally adjusted 19,000 to 2.87 million, the Nuremberg- based Federal Labor Agency said. Economists had forecast a decline of 10,000, the median of 34 estimates in a Bloomberg survey showed.

In the U.S., a report from ADP Employer Services showed that companies added the fewest number of workers in seven months in April. Employment increased by 119,000 following a revised 201,000 gain the prior month, the data showed.

Standard Chartered led banks lower, falling 3.9 percent to 1,453 pence as the U.K.’s second-largest lender by market value said operating profit in the first quarter expanded by a “low double-digit” rate from a year earlier. The bank also said it had “high single-digit” revenue growth for the period. Even so, the company said sales was curbed by the U.S. dollar’s strength against Asian currencies.

Barclays, Lloyds, RBS

Barclays Plc (BARC) lost 5.1 percent to 213.65 pence and Lloyds Banking Group Plc (LLOY) fell 4.5 percent to 32.08 pence after the shares jumped 8.3 percent yesterday. Royal Bank of Scotland Group Plc (RBS), which is due to report earnings on May 4, slid 2.1 percent to 24.77 pence.

A gauge of U.K. banks stocks jumped 2.3 percent yesterday, its biggest advance in two weeks.

Home Retail sank 13 percent to 87.55 pence after the owner of the Argos and Homebase chains said it won’t pay a final dividend. The company posted a 60 percent drop in annual profit to 102 million pounds ($165 million). That still beat the average analyst estimate of 96.7 million pounds, according to a Bloomberg survey.

“The group’s performance in the short term cannot be immune from the economic environment,” Chairman Oliver Stocken said in the statement. “Against this economic backdrop, the board has decided not to recommend a final dividend this year.”

BSkyB, Next Gain

BSkyB climbed 1.5 percent to 701.5 pence for a third day of gains. The U.K.’s biggest pay-TV operator reported a jump in operating profit to 1.19 billion pounds in the nine months to the end of March as the company gained broadband customers. Sales rose 5 percent to 5.08 billion pounds.

Next Plc (NXT) increased 2.6 percent to 2,971 pence, climbing for the first time in three days. The U.K.’s second-largest clothing retailer maintained its annual profit forecast after a first quarter in which the growth of the Directory home-shopping unit compensated for a drop in store sales.

The company predicted pretax profit of 560 million pounds to 610 million pounds compared with the previous year’s 579.5 million pounds.

Housebuilders advanced as U.K. mortgage approvals rose to 49,860 loans in March. That compared with 49,029 in February, the Bank of England said today in London. Economists had forecast 48,000, according to the median of 21 estimates in a Bloomberg survey.

Taylor Wimpey Plc (TW/) increased 2.6 percent to 51.95 pence, Bellway Plc (BWY) jumped 2.7 percent to 808 pence and Barratt Developments Plc (BDEV) gained 2.4 percent to 135.2 pence.

To contact the reporters on this story: Tom Stoukas in Athens at astoukas@bloomberg.net; Sarah Jones in London at sjones35@bloomberg.net

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


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