Bloomberg News

U.K. Stocks Drop as Rajoy Says No Pressure to Seek Aid

October 19, 2012

U.K. stocks declined as Spain’s Prime Minister Mariano Rajoy he doesn’t face pressure to seek a sovereign bailout for his nation.

Lloyds Banking Group Plc (LLOY) lost 3.3 percent after JPMorgan Chase & Co. downgraded the shares. Redrow Plc (RDW) slid 3.8 percent after a group led by Chairman Steve Morgan ended takeover talks with the company. Spectris Plc (SXS) jumped the most in almost 20 months after saying it will meet full-year forecasts.

The FTSE 100 (UKX) Index fell 20.90 points, or 0.4 percent, to 5,896.15 at the close in London, as European Union leaders wrapped up a two-day summit in Brussels. The gauge gained 1.8 percent this week. The FTSE 100 has still climbed 12 percent from this year’s low on June 1 as the European Central Bank agreed on an unlimited bond-buying plan and the Federal Reserve started a third round of quantitative easing.

“It’s the first summit in a long while -- they were not under severe pressure from the financial markets so there was a bit of complacency,” Carsten Brzeski, senior economist at ING Groep NV in Brussels told Maryam Nemazee on Bloomberg Television. “If we really want to see politicians of the euro zone moving on with political integration, we’ll have to see more tension first.”

The broader FTSE All-Share lost 0.3 percent today, while Ireland’s ISEQ Index retreated 0.6 percent.

No Pressure

Rajoy said today “no one” is exerting pressure on Spain to seek a bailout.

“I don’t see any European Union leader telling me I should use the mechanism the ECB has put in place,” Rajoy told reporters after the EU summit in Brussels.

French President Francois Hollande said leaders didn’t discuss additional assistance for Spain.

EU leaders will seek to agree on a framework that makes the ECB the main supervisor for the region’s banks by Jan. 1, according to conclusions at the Brussels summit. The new system, intended to break the link between banks and governments at the root of the region’s sovereign-debt crisis, will phase in over the next year and could cover all 6,000 euro-area lenders by Jan. 1, 2014.

German Chancellor Angela Merkel told reporters after the summit it’s an open question whether policy makers can meet the year-end deadline.

In the U.S., sales of previously owned houses fell 1.7 percent in September from a month earlier, the National Association of Realtors said in a report today. Economists had forecast a 1.6 percent drop. Sales increased a revised 8.1 percent in August.

Banks Fall

Lloyds retreated 3.3 percent to 40.49 pence after JPMorgan lowered its recommendation on the shares to underweight, the equivalent of sell, from neutral.

Barclays Plc (BARC) slid 2.9 percent to 233.85 pence, while Royal Bank of Scotland Plc declined 2.1 percent to 281 pence.

Redrow tumbled 3.8 percent to 156.4 pence. Bridgemere Securities Ltd., led by Morgan, along with Toscafund Asset Management LLP and Penta Capital LLP, said in a statement they ended talks of a possible offer for the U.K. homebuilder.

Aggreko Plc (AGK) plunged 7.2 percent to 2,137 pence, the most since August 2011, after saying currency fluctuations and an increase in bad-debt provisions will reduce full-year profit by 2.5 percent.

Bunzl Plc (BNZL) dropped 4.1 percent to 1,038 pence after the company said underlying revenue growth rate slowed to 2 percent in the third quarter of the year.

Spectris jumped 12 percent to 1,779 pence, the most since February 2011, after its board said the company is “well- positioned” to meet full-year estimates. Reported sales rose 12 percent in the last quarter, it said in an interim statement.

Burberry Plc advanced 0.7 percent to 1,188 pence after Investec Plc asked investors to buy the shares, upgrading them from hold.

William Hill Plc (WMH) climbed 4.1 percent to 357.5 pence after saying it’s confident of meeting its earnings expectations for the full year.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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


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