Bloomberg News

U.K. Stocks Little Changed Amid U.S. Debt-Ceiling Concern

January 15, 2013

U.K. stocks were little changed amid concern that U.S. lawmakers will fail to increase the federal government’s debt ceiling.

Lonmin Plc (LMI) rallied 2.8 percent as platinum climbed. Burberry Group Plc (BRBY) rose 4.1 percent after reporting better-than- forecast third-quarter sales. Royal Bank of Scotland Group Plc (RBS) fell 2.4 percent after people familiar with the situation said the lender may pay 500 million pounds ($803 million) in fines.

The FTSE 100 lost 3.87 points, or 0.1 percent, to 6,103.99 at 2:44 p.m. in London, paring a slide of as much as 0.4 percent. The equity benchmark rose to its highest level since May 2008 last week amid optimism that U.S. companies’ earnings would exceed analysts’ estimates. The broader FTSE All-Share Index slipped less than 0.1 percent today, while Ireland’s ISEQ Index fell 0.3 percent.

The volume of shares changing hands in FTSE 100 (UKX) companies was 34 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

“There seems to be some intolerance from both parties in the U.S., and investors are mainly waiting for a sign of a resolution regarding spending cuts, which is essentially the biggest part of a budget deal,” said Paulo Goncalves, who helps manage about $233 million at Banco Popular Portugal SA in Lisbon. “This has been bothering markets a little lately, and is back today after Obama’s comments last night.”

President Barack Obama said yesterday that he won’t negotiate over raising the government’s debt ceiling because the U.S. has to pay for spending it has authorized. The president warned of economic calamity and stalled payments to Social Security recipients, military personnel and government creditors if congressional Republicans fail to lift the $16.4 trillion debt limit. Congress has raised or revised the debt limit 79 times since 1960, according to the Treasury Department.

Unorthodox Easing

Federal Reserve Chairman Ben S. Bernanke said that the central bank’s $85 billion in monthly purchases of bonds bolsters the economy.

“We think we are getting some effect; it is kind of early,” Bernanke said yesterday at the University of Michigan’s Gerald R. Ford School of Public Policy in Ann Arbor. “We are going to continue to assess how effective” the program is “because it is possible that as you move through time and the situation changes that the impact of these tools could vary.”

Lonmin, which runs the Marikana platinum mine in South Africa, jumped 2.8 percent to 342 pence after Anglo American Platinum Ltd. said it would cut output by as much as 19 percent. The world’s biggest platinum producer, which is also known as Amplats, will idle four mine shafts in South Africa, effectively reducing global output of the metal by almost 7 percent.

Platinum Producers

Platinum climbed 1.9 percent, rising to its highest price in three months. Aquarius Platinum Ltd. (AQP), which also extracts platinum from facilities in Africa, surged 9.2 percent to 71 pence, its biggest gain in a week.

Burberry rose 4.1 percent to 1,379 pence, the biggest gain on the FTSE 100 Index, as demand for higher-priced styles increased sales in its own shops. Revenue jumped 7 percent to 613 million pounds, the U.K.’s largest luxury-goods company said. That exceeded the 601.4 million-pound average of analysts’ estimates compiled by Bloomberg.

Ocado Group Plc (OCDO) climbed 2.8 percent to 86.5 pence. The online grocer said its fourth-quarter gross sales gained 12 percent and Christmas sales increased 14 percent.

RBS Slips

RBS dropped 2.4 percent to 355.9 pence, halting a seven-day rally, after people with knowledge of the matter said the lender may pay fines to settle allegations that traders tried to rig interest rates. Investment banking chief John Hourican and markets head Peter Nielsen may have to leave, two people said.

ARM Holdings Plc (ARM) fell 3.8 percent to 839.5 pence, its biggest drop in more than three months. Morgan Stanley lowered its rating on the designer of chips for Apple Inc.’s iPhones to equal weight from overweight, meaning that investors should not buy more of the shares. The brokerage cited its valuation.

IG Group Holdings Plc slipped 1.8 percent to 459.2 pence. The owner of the IG spread-betting business said first-half net trading revenue decreased 14 percent to 169 million pounds and pretax profit slid 21 percent to 81.1 million pounds.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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


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