Bloomberg News

U.K. Stocks Little Changed as Italy Borrowing Costs Jump

June 13, 2012

U.K. stocks were little changed as borrowing costs rose at debt auctions by Italy and Germany, and U.S. retail sales fell in May.

J Sainsbury Plc (SBRY) slid 2.6 percent after reporting revenue at stores open at least a year that rose less than analysts’ estimates. Man Group Plc slipped 3.4 percent after Barclays Plc lowered its price forecast. Kewill (KWL) Plc surged 13 percent after Kestrel Bidco Ltd. offered to buy the company.

The FTSE 100 (UKX) Index gained 0.2 percent to 5,483.81 at the close of trade in London as 58 stocks fell, 43 rose and one was unchanged. The gauge has lost 8.1 percent from its 2012 high on March 16 as concern mounted that Greece will be forced to leave the euro area. The broader FTSE All-Share Index added 0.1 percent today and Ireland’s ISEQ Index dropped 0.4 percent.

“There’s still caution because of the Greek elections over the weekend,” David Jones, chief market strategist at IG Index, said in a phone interview. “Nothing dramatic will happen in the next couple of days.”

Greeks head to the polls on June 17 after an inconclusive May 6 election that catapulted into second place a party opposed to budget-austerity accords tied to 240 billion euros ($301 billion) in international aid pledges for Greece since May 2010.

Borrowing Costs

Italy’s borrowing costs surged at the sale of 6.5 billion euros of Treasury bills after the 100 billion-euro bailout of Spain’s banking system failed to stop contagion from the region’s debt crisis.

The Rome-based Treasury sold the one-year bills at 3.972 percent, 1.6 percentage points more than the 2.34 percent at the previous auction on May 11. Investors bid for 1.73 times the amount offered, down from 1.79 times last month.

Germany sold 4.04 billion euros of 10-year bunds at an average yield of 1.52 percent, up from a rate of 1.47 percent the last time the nation sold the securities on May 16.

Investors bid for 5.81 billion euros of the bunds, exceeding the 5 billion-euro maximum sales target for the auction, the Bundesbank said in a statement today.

Retail sales in the U.S. fell in May for a second month as slower employment and subdued wage gains damped demand, a sign the world’s largest economy is cooling.

The 0.2 percent decrease followed a similar decline in April that was previously reported as a gain, Commerce Department figures showed today in Washington. Last month’s drop matched the median forecast of 79 economists surveyed by Bloomberg News. Sales excluding automobiles slumped by the most in two years.

Sainsbury Revenue

Sainsbury slid 2.6 percent to 283.5 pence. The U.K.’s third-largest supermarket company said revenue at stores open at least a year rose 1.4 percent in the 12 weeks ended June 9, excluding gasoline sales. That missed the 1.8 percent median estimate of nine analysts compiled by Bloomberg and was less than the prior quarter’s 2.6 percent increase.

Man Group (EMG), the world’s biggest publicly traded hedge-fund manager, slipped 3.4 percent to 72 pence. Barclays cut the company’s price target by 25 percent to 105 pence.

Kewill surged 13 percent to 107.5 pence, its highest price in 14 months. Kestrel has bid 106 pence per share for the computer services company, topping an offer by Kinetic Bidco Ltd., an investment vehicle indirectly owned by Francisco Partners Funds.

Nautical Petroleum Plc (NPE) soared 55 percent to 462 pence after Cairn Energy Plc, the U.K. oil explorer with assets from Greenland to Nepal, agreed to buy the company for 414 million pounds ($645 million) to add fields in the North Sea. Cairn will pay Nautical shareholders 450 pence a share. Cairn (CNE) shares slid 1.1 percent to 288.7 pence.

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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