Bloomberg News

U.K. Stocks Little Changed Amid Economic Concern

July 16, 2012

U.K. stocks closed little changed as the International Monetary Fund cut its outlook for the global economy and inquiries into charges of interest-rate manipulation intensified on both sides of the Atlantic.

Barclays Plc (BARC), which paid a 290 million-pound ($452 million) fine for rigging the London Interbank Offered Rate, fell for a fourth day. G4S Plc slumped the most in nine months after saying it may incur a 50 million-pound loss as it failed to provide enough guards for the London Olympics.

The FTSE 100 Index fell 3.7 points, less than 0.1 percent, to 5,662.43 at the close of trading in London. The benchmark gauge has lost 5.1 percent from its 2012 high on March 16 amid concern the euro-area debt crisis is worsening and global economic growth is slowing down. The broader FTSE All-Share Index added less than 0.1 percent today, while Ireland’s ISEQ Index rose 0.9 percent.

“The possibility of stagnation around the world has increased,” Richard Urwin, head of investments at BlackRock Inc.’s Fiduciary Mandate Investment Team, said at a briefing in London. Without policy intervention, “the emergence of a self- sustaining recovery doesn’t seem probable, especially in the developed world.”

The volume of shares changing hands on FTSE 100 (UKX) companies was 35 percent lower than its 30-day average, according to data compiled by Bloomberg.

Worsening Outlook

The IMF cut its 2013 global growth forecast as well as the projection for the British economy.

Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook.

The U.K. economy will advance 1.4 percent next year, less than the 2 percent growth seen in April, the fund predicted.

Libor investigations on both sides of the Atlantic intensified, with Barclays traders facing possible U.S. charges by September and British lawmakers may use hearings this week to expand their inquiry to other banks tied to the global financial scandal.

Traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington.

Barclays dropped 2.7 percent to 157.7 pence, the lowest price since November.

U.S. Economy

Manufacturing in the New York region expanded in July at a faster pace than anticipated, a report showed today. The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0.

Meanwhile, U.S. retail sales unexpectedly declined for a third straight month in June.

G4S Plc (GFS) dropped 8.7 percent to 254.6 pence, the biggest slump since Oct. 17. The U.K. security provider said it may incur a 50 million-pound loss on the work for failing to provide enough guards. The government had to assign 3,500 extra soldiers after G4S couldn’t meet the terms of its 284-million pound contract to provide 13,700 guards for the Games, which start on July 27.

Cove Energy Plc (COV) slumped 14 percent to 238 pence, the biggest decrease since August, after Royal Dutch Shell Plc, Europe’s largest energy producer, declined to raise its offer for the company, leaving Thailand’s PTT Exploration & Production Pcl as the highest bidder for the East Africa-focused explorer.

Sage Group Plc (SGE) declined 3.2 percent to 276 pence after the accounting and payroll-software company said it remained “cautious” on its European outlook. Numis Securities Ltd. cut the stock to hold from add.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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