Bloomberg News

U.K. Stocks Decline to Five-Week Low as Greek Aid Delayed

November 08, 2012

U.K. stocks slid to a five-week low, erasing earlier gains after a European Union official said a decision on unlocking funds for Greece may not be made until late November.

Balfour Beatty Plc (BBY) sank the most in 14 years as the U.K.’s largest construction company said the outlook for profit margins has faded because of a lack of building work in Britain. G4S Plc (GFS) declined the most in three months after losing a U.K. prison contract. BTG Plc (BTG) jumped 7.6 percent after the drugmaker reported an increase in first-half earnings and revenue. Burberry Group Plc climbed 1.3 percent.

The FTSE 100 Index fell 15.58 points, or 0.3 percent, to 5,776.05 at the close in London, the lowest since Sept. 28. The gauge fell 1.6 percent yesterday as the European Commission cut its euro-area growth forecast and concern over an impending U.S. fiscal crisis overshadowed the re-election of President Barack Obama. The FTSE All-Share Index also declined 0.3 percent today, while Ireland’s ISEQ Index fell 0.8 percent.

“Equities posted a small bounce on the open but this has quickly fizzled out as traders remain relatively bearish,” Manoj Ladwa, the head of trading at TJ Markets in London, wrote in an e-mail. “The raft of corporate earnings this morning has done little to lift confidence amongst traders. Now the U.S. election is out of the way, the euro zone seems to be coming back to the forefront.”

The benchmark FTSE 100 has still climbed 3.7 percent this year as the European Central Bank unveiled an unlimited bond- buying plan and the Federal Reserve announced a third round of quantitative easing.

BOE Assistance

The Bank of England halted expansion of its asset-purchase program today after some policy makers questioned its effectiveness in supporting a recovery that remains lackluster. The Monetary Policy Committee kept its target for asset purchases at 375 billion pounds ($598 billion), as forecast by 35 of 45 economists in a Bloomberg survey. The central bank also held its key interest rate at a record low of 0.5 percent.

In Greece, Prime Minister Antonis Samaras obtained a parliamentary majority for a package of austerity measures needed to unlock further financial aid from the EU. The bill on pension, wage and benefit cuts was approved with 153 votes in favor in the 300-seat Parliament early today, according to acting speaker Athanasios Nakos. A total of 128 lawmakers voted against the bill, while 18 abstained and one member was absent.

Aid Decision

The FTSE 100 (UKX), which earlier rose as much as 0.6 percent, erased its gains as an EU official said euro-area finance ministers may not make a decision on unlocking funds until late November as they await a full report on Greece’s compliance with the terms of its bailout.

Finance chiefs won’t make the call to release 31.5 billion euros ($40.1 billion) of aid for Greece that has been frozen since June when they meet in Brussels on Nov. 12, the official said today on condition of anonymity.

Balfour Beatty slumped 18 percent to 250.1 pence, the biggest drop since October 1998. The company’s order book decreased by 4 percent to 14.4 billion pounds in the three months through September, weighed down by a deteriorating U.K. construction industry.

G4S slid 3.1 percent to 259.2 pence, the biggest drop since July 17. The U.K. government stripped the company of its contract to run the Wolds prison in Yorkshire following criticism of its shortcomings in providing security for the London Olympics. G4S also failed to win further jail contracts it had bid for.

ENRC Drops

Eurasian Natural Resources Corp. (ENRC), a Kazakh metals producer, slipped 3.4 percent to 294.6 pence after it said sales in the first nine months slumped and will continue be pressured by lower prices. Revenue “deteriorated sharply” as prices for iron ore declined by 26 percent and ferroalloys fell 8 percent, ENRC said, without giving dollar figures.

Land Securities Group Plc (LAND) retreated 2 percent to 794.5 pence. The U.K.’s largest real estate investment trust said first-half profit declined 9.8 percent after it sold buildings to finance developments.

BTG surged 7.6 percent to 352.4 pence, its biggest gain in a month. The drugmaker said revenue and earnings rose in the first half and maintained its 2013 forecast.

Burberry (BRBY), the U.K.’s largest luxury-goods maker, climbed 1.3 percent to 1,214 pence. Hermes International SCA, the French maker of Birkin bags and silk scarves, reported third-quarter sales that beat analysts’ estimates and raised its 2012 revenue growth target to more than 13 percent on surging demand in Asia.

Cable & Wireless Communications Plc (CWC) advanced 5.8 percent to 38 pence, the biggest increase since May 24. The provider of phone services in the Caribbean reported first-half earnings before interest, taxes, depreciation and amortization of $445 million, compared with the average analyst estimate of $442 million.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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