Bloomberg News

U.K. Stocks Drop Most in 10 Weeks as Shell Slides

January 31, 2013

U.K. stocks dropped the most in 10 weeks, paring their biggest monthly advance since October 2011, as Royal Dutch Shell Plc (RDSA)’s earnings missed estimates and AstraZeneca Plc predicted profit will tumble this year.

Shell, Europe’s largest oil producer, slid 2.8 percent. AstraZeneca tumbled 3.2 percent after the U.K.’s second-biggest drugmaker said revenue will decline more than analysts had forecast. Lonmin Plc (LMI), the world’s third-largest platinum producer, surged 14 percent as sales of the metal increased.

The FTSE 100 (UKX) Index lost 46.23 points, or 0.7 percent, to 6,276.88 at the close in London, the biggest decline since Nov. 16. The equity benchmark still gained 6.4 percent this month, its best start to a year since 1989, as U.S. lawmakers agreed on a compromise budget. The broader FTSE All-Share Index retreated 0.6 percent today, while Ireland’s ISEQ Index slipped less than 0.1 percent.

“Markets are pausing for breath, which reflects the strong run they’ve had and the slight downturn in data,” said Guy Foster, head of portfolio strategy at Brewin Dolphin Securities Ltd. in London. “Earnings in the U.K. will be a mixed bag. The mood in the market has been buoyed by generally good earnings, so companies that report a poor outlook get punished.”

In the U.S., a Labor Department report showed initial jobless claims increased to 368,000 in the week ended Jan. 26, from 330,000 the previous week. The median forecast of economists in a Bloomberg survey called for 350,000 claims.

The volume of shares changing hands in companies listed on the FTSE 100 was 38 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

Shell, AstraZeneca

Shell slid 2.8 percent to 2,241 pence, the biggest decline in a year. The company reported fourth-quarter profit of $5.6 billion, excluding one-time items and inventory changes. That fell short of the $6.2 billion average estimate of analysts surveyed by Bloomberg.

AstraZeneca (AZN) sank 3.2 percent to 3,053 pence, its biggest drop in nine months, as the drugmaker said sales will fall by a “mid- to high-single digit percentage” at constant exchange rates in 2013 and profit will drop even more. Analysts had forecast that sales would decline 3 percent. The company also said earnings fell for a fourth consecutive quarter.

HSBC Holdings Plc (HSBA) slipped 1 percent to 716.7 pence and Royal Bank of Scotland Group Plc (RBS) retreated 1.1 percent to 343.3 pence. The lenders, along with Barclays Plc (BARC) and Lloyds Banking Group Plc, have agreed to compensate small businesses for improperly selling interest-rate derivatives, the Financial Services Authority said in a statement.

A gauge of banks in the FTSE 350 Index fell 0.5 percent.

Lonmin Rallies

Lonmin jumped 14 percent to 360 pence, the biggest jump since March 2009. The mining company said first-quarter platinum sales increased 17 percent to 108,342 ounces.

British Sky Broadcasting Group Plc (BSY) added 0.9 percent to 817.5 pence as the U.K.’s biggest pay-TV broadcaster said operating profit adjusted for some items rose to 647 million pounds ($1.02 billion) in the six months ended Dec. 31. Analysts had projected earnings of 636 million pounds.

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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