U.K. stocks retreated, following their biggest weekly gain this year, amid concern Spanish Prime Minister Mariano Rajoy’s government will have to manage increased calls for an independence referendum in Catalonia.
Barclays Plc (BARC) slid 5.4 percent, the biggest drop on the FTSE 100 (UKX) Index, after Qatar Holding LLC sold the last of the bank’s warrants it acquired during the financial crisis in 2008. Cranswick Plc (CWK) jumped the most in almost four years after reporting its first-half results.
The benchmark FTSE 100 lost 32.42 points, or 0.6 percent, to 5,786.72 at the close in London. The equity benchmark has rallied 10 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 began a third round of asset purchases in the U.S. The broader FTSE All-Share Index declined 0.5 percent today, while Ireland’s ISEQ Index fell 0.5 percent.
“The Catalan election results are a headache the prime minister doesn’t need at the moment,” Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London, said by phone. “The Spanish government has said that a referendum is unconstitutional and it’s being challenged now. That raises an element of uncertainty on top of everything else that Spain is already facing.”
Yields on Spanish 10-year government bonds rose for the first time in five days as parties seeking a referendum on Catalonia’s secession won a regional vote. Rajoy, who has refrained from asking for a bailout from the European Union, says that such a referendum would be unconstitutional.
Euro-area finance ministers met in Brussels to find a way to reduce Greece’s debt over the long term and provide it with the next installment of its bailout in the short term. They failed to disburse the aid at two previous meetings this month.
The ministers will brief the International Monetary Fund and the ECB on concessions that would cut Greece’s deficit without requiring its lenders to writedown their loans, Austria’s Maria Fekter said today before the talks began.
In the U.K., the Institute for Fiscal Studies said that Chancellor of the Exchequer George Osborne may have to extend his austerity program by another year to 2018. Osborne may need to further increase taxes and spending cuts to erase the country’s structural deficit over the next five years, the London-based research group said.
Mark Carney will be the next governor of the Bank of England, Osborne said in the House of Commons. He will replace Mervyn King, who steps down at the end of June 2013.
A gauge of banking shares declined 1.7 percent. Barclays slid 5.4 percent to 240.5 pence after the investment unit of Qatar’s sovereign-wealth fund said late yesterday it has monetized 379 million units of the lender’s warrants. Deutsche Bank AG and Goldman Sachs Group Inc., the banks that arranged the transaction, sold as many as 303.3 million Barclays shares to money managers for 244 pence apiece, the bottom of a 244 pence to 248 pence range used to assess interest in the sale.
Royal Bank of Scotland Group Plc (RBS) slipped 3 percent to 285.1 pence, HSBC Holdings Plc (HSBA) dropped 0.9 percent to 620 pence and Lloyds Banking Group Plc (LLOY) declined 2.8 percent to 45.1 pence.
Centamin Plc (CEY), a gold producer in Egypt, tumbled 6.3 percent to 60.6 pence, sliding for a sixth day. Egypt’s secular parties and youth groups will hold mass demonstrations tomorrow to protest against decrees on Nov. 22 that placed President Mohamed Mursi’s decisions above judicial review.
Separately, Centamin said in a statement today that it will file an appeal against a preliminary ruling by an Egyptian court and is preparing to resume exports. On Oct. 30, the Administrative Court annulled a contract that allowed the company to extract gold from the Sukari mine, saying that the state failed to exercise sufficient oversight of Centamin.
Randgold Resources Ltd. (RRS) slid 1.7 percent to 6,540 pence and Antofagasta Plc (ANTO) slid 1.2 percent to 1,246 pence.
SDL Plc (SDL) plunged 14 percent to 438.5 pence after saying that full-year profit will fall short of analysts’ forecasts by 3 million pounds ($4.8 million) to 4 million pounds. The average estimate of analysts in a Bloomberg survey had called for profit before taxes of 39.4 million pounds.
Essar Energy Plc (ESSR) climbed 4.9 percent to 127 pence after saying first-half revenue surged 97 percent to $12.8 billion from a year earlier, driven by higher capacity from its acquisition of the Stanlow oil refinery in Northern England.
Cranswick jumped 10 percent to 812.5 pence, its largest rally since December 2008, after reporting first-half pretax profit of 22.5 million pounds. The company’s efficiency improvements will help its margins increase in the second half of the year, Panmure Gordon & Co. Plc wrote in a report.
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