U.K. stocks were little changed, after the FTSE 100 Index posted the biggest two-day selloff since May, as China’s manufacturing contracted at a slower pace while Moody’s Investors Service cut Germany’s credit outlook.
Vodafone Group Plc (VOD) dropped 1.1 percent after Dutch peer Royal KPN NV cut its dividend forecast. Elan Corp. plunged the most in more than 11 months in Dublin after its experimental Alzheimer’s drug failed a trial. Man Group Plc rallied 7.7 percent as the world’s biggest publicly traded hedge fund manager said it will double cost cuts and reduce reliance on products with steeper commissions.
The FTSE 100 retreated 4.08 points, or 0.1 percent, to 5,529.79 at 12:52 p.m. in London. The gauge has still climbed 5.1 percent from its 2012 low on June 1 as central banks announced measures to boost economic growth. The broader FTSE All-Share Index was also little changed today, while Ireland’s ISEQ Index (ISEQ) sank 2.1 percent.
“Growth in the euro zone is very hard to come by nowadays and this is affecting Germany’s activity too,” said Simon Denham, managing director of Capital Spreads in London. “With question marks over the prized triple-A credit rating of Europe’s largest economy, the markets are likely to remain on the back foot.”
In Germany, an index based on a survey of purchasing managers in the manufacturing industry declined to 43.3 this month from 45 in June, while a services gauge fell to 49.7 from 49.9, London-based Markit Economics said in a report today. A reading below 50 indicates a contraction.
Moody’s lowered the outlooks for the Aaa credit ratings of Germany, the Netherlands and Luxembourg to negative. The risk that Greece will leave the euro area and “increasing likelihood” of collective support for countries in debt such as Spain and Italy were among reasons for the change, Moody’s said late yesterday in a statement.
China’s manufacturing may contract at a slower pace in July as the government’s stimulus starts to reverse the economy’s slowdown, a private survey indicated. The 49.5 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compared with a final 48.2 for June. A number above 50 indicates expansion.
Vodafone declined 1.1 percent to 177.2 pence after KPN cut its dividend forecast by 61 percent. The Dutch phone company reported second-quarter profit that trailed analysts’ estimates as service demand in its home market contracted.
Elan tumbled 14 percent to 9.53 euros in Dublin, the most since August 2011. Bapineuzumab, an experimental Alzheimer’s drug the company was developing along with Pfizer Inc. and Johnson & Johnson, failed to improve signs of dementia in the first of four studies testing the drug.
Elan shares make up 10 percent of Ireland’s ISEQ Index by weighting, according to Bloomberg data.
Man Group (EMG) jumped 7.7 percent to 74.5 pence. The company said it will reduce expenses by $100 million over the next 18 months, adding to $95 million of cost cuts announced in March. It also plans to sell fewer so-called guaranteed products, which generate high commissions for employees and have drawn subdued demand from customers.
Unilever (ULVR) gained 1 percent to 2,177 pence after its Indian unit, Hindustan Unilever Ltd., said net income doubled to 13.3 billion rupees ($237 million) in the three months ended June 30, including a one-time gain of 6.07 billion rupees. The median estimate of analysts in a Bloomberg survey called for a 6.96 billion-rupee profit.
Provident Financial Plc (PFG) surged 12 percent to 1,312 pence. The U.K.’s biggest subprime lender said first-half net income rose 20 percent after the number of customers taking out high- interest credit cards increased.
Croda International Plc (CRDA) added 6.7 percent to 2,379 pence after the world’s second-largest maker of cosmetic ingredients reported a 6.3 percent gain in first-half pretax profit on higher demand in North America. Croda’s “strong” results may provide reassurance to investors, JPMorgan Chase & Co. said in a report.
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