Bloomberg News

U.K. Stocks Close Little Changed Near Three-Week High

November 30, 2012

U.K. stocks closed little changed, after the FTSE 100 (UKX) Index rallied to a three-week high yesterday, as American lawmakers continued to negotiate a deal on the federal budget.

Intertek (ITRK) Group Plc paced rising shares after Berenberg Bank recommended investors buy the company. Taylor Wimpey Plc (TW/) led homebuilders higher as UBS AG upgraded the shares. Royal Bank of Scotland Group Plc (RBS) fell after as the lender said it won’t proceed with the sale of its Indian retail and commercial unit.

The FTSE 100 dropped 3.48, less than 0.1 percent, to 5,866.82 in London, trimming its rally in November to 1.5 percent. The gauge increased for a sixth month -- its longest stretch of gains since 2006 -- boosted by speculation that Congress will agree on a new budget to avoid the so-called fiscal cliff. The broader FTSE All-Share Index was also little changed today, while Ireland’s ISEQ Index slipped 0.3 percent.

“We’re entering a period where markets traditionally see trading volumes start to thin out,” wrote Oliver Wallin, an investment director at Octopus Investments in a note to clients. “Thoughts in December often turn wistfully to a seasonal Santa rally. Any chance of that this year will rest with the policy makers on Capitol Hill.”

Christmas Deadline

U.K. stocks rallied yesterday to the highest since the re- election of Barack Obama on Nov. 6, as the president expressed optimism that Democrats and Republicans can strike a deal before Christmas, thus preventing $607 billion of automatic tax increases and spending cuts from coming into effect next year.

Speaker of the House John Boehner told reporters after the close of European trading yesterday that there’s been “no substantive progress” in budget talks. Congressional Republicans also complained that a budget plan outlined yesterday by Treasury Secretary Timothy Geithner was little more than a rehash of old proposals.

The FTSE 100 earlier today climbed as much 0.6 percent after a report showed an unexpected rise in U.K. consumer confidence this month.

A sentiment index rose to minus 22, the strongest reading since May 2011, from minus 30 in October, according to London- based GfK NOP Ltd. Economists had forecast that the index would remain unchanged, a Bloomberg News survey showed.

Intertek, Capita

Intertek climbed 1 percent to 3,090 pence after Berenberg raised its recommendation for the world’s largest consumer-goods testing company to buy from hold and lifted its price estimate for the stock by 23 percent to 3,340 pence.

Taylor Wimpey and Bellway Plc (BWY) led house-builders higher, rallying 3 percent to 61 pence and 1 percent to 997.5 pence, respectively. UBS upgraded the companies to buy from neutral, saying this year’s improvement in returns will continue for at least the next three years.

The bank also reiterated its buy recommendations on Barratt Developments Plc, Berkeley Group Holdings Plc and Persimmon Plc in a note to clients dated today.

HSBC Holdings Plc recommended the U.K. homebuilders yesterday, upgrading the industry to overweight, the equivalent of a buy rating.

Royal Bank of Scotland fell 1.3 percent to 295.2 pence after Britain’s biggest taxpayer-owned lender said the sale of its Indian consumer and commercial-banking operations to HSBC Holdings Plc collapsed. RBS will wind down the unit, the 81 percent taxpayer-owned bank said in a statement today. RBS announced the sale to London-based HSBC for an undisclosed sum in July 2010.

Burberry Group Plc (BRBY) dropped 2.3 percent to 1,287 pence, the biggest decline on the FTSE 100. The shares had rallied 6.5 percent over the previous three days as London-based newspapers speculated that the luxury-goods maker may be a takeover target.

Lonmin Plc (LMI) dropped 5 percent to 258.10 pence. The platinum producer has tumbled 13 percent this week as fund managers that track benchmark indexes sold the platinum producer before it exits the MSCI Europe Index after the close of trading today.

Lonmin is the second most shorted stock on the FTSE All- Share Index -- only behind CSR Plc -- with 18.5 percent of shares outstanding as of Nov. 28, according to Markit.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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


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