U.K. stocks closed little changed, erasing an earlier rally, as mining companies declined with metal prices and a report showed sales of previously owned U.S. houses unexpectedly dropped in March.
Kazakhmys Plc (KAZ) led a gauge of commodity producers lower, tumbling 8.3 percent. Weir Group Plc (WEIR) paced losses in engineering companies as Caterpillar Inc. cut its 2013 forecast. Royal Bank of Scotland Group Plc (RBS) and Lloyds Banking Group Plc (LLOY) rose.
The FTSE 100 Index slid less than 0.1 percent to 6,280.62 in London. The benchmark gauge lost 1.5 percent last week as commodities fell amid worse-than-forecast economic data from China and the U.S. The broader FTSE All-Share Index slipped 0.2 percent, while Ireland’s ISEQ Index added 0.5 percent.
“Concerns about the global macro picture and what has been reasonably lackluster earnings season continue to weigh on investors,” said Henk Potts, who helps oversee $282 billion as an equity strategist at Barclays Plc in London. “We are still pretty bullish in the medium to longer term. We have seen an extraordinary rally and the weakness we have seen recently is a reminder that markets don’t go up in a straight line.”
Stocks fell as a U.S. report showed sales of previously owned houses dropped 0.6 percent to a 4.92 million annual rate in March. The median forecast of economists surveyed by Bloomberg projected sales would increase to a 5 million rate.
Fitch Ratings cut the U.K.’s credit rating to AA+ from AAA on April 19, citing weaker economic and fiscal prospects. The ratings company restored the outlook to stable even as it predicted that U.K. debt will peak at more than 100 percent of gross domestic product.
The FTSE 100 earlier rallied as much as 0.9 percent after Italian President Giorgio Napolitano was re-elected to a second term, boosting optimism that he will take the lead in trying to form a new coalition government. The nation’s sovereign bonds advanced, pushing the two-year note yield to a record low.
Kazakhmys dropped 8.3 percent to 353.6 pence as copper declined on the London Metal Exchange. The stock soared 24 percent on April 19 after investor Alexander Machkevitch said he may form a group to make an offer for Eurasian Natural Resources Corp. ENRC declined 2.4 percent to 284.1 pence after surging 27 percent last week.
Weir led engineering companies lower, falling 2.7 percent to 2,074 pence. Melrose Industries Plc dropped 3.3 percent to 236.6 pence and Petrofac Ltd. lost 2.7 percent to 1,267 pence.
Caterpillar, the largest maker of mining equipment, posted earnings that fell short of estimates and cut its 2013 forecast and lowered “significantly” its outlook for demand from commodities producers.
Banks helped limit losses on the FTSE 100. RBS climbed 2 percent to 286.2 pence, Lloyds added 3.5 percent to 49.13 pence and Barclays rose 1.1 percent to 289.5 pence.
Elsewhere, Randgold Resources Ltd. (RRS) rallied 4.4 percent to 4,870 pence as gold prices climbed for a fifth day in London after the biggest slump in three decades boosted physical purchases. Gold for immediate delivery rose 2.3 percent to $1,436.60 an ounce, for its longest run of gains since Dec. 27.
Randgold had declined for three-consecutive weeks.
Betfair Group Plc (BET) jumped 4.2 percent to 838.5 pence, its highest price since May 3, 2012. The online-gambling company said it rejected a takeover proposal from CVC Capital Partners at 880 pence per share, saying the offer “fundamentally undervalues the company.”
Paddy Power Plc (PWL) dropped 5.7 percent to 61.53 euros in Dublin trading as J&E Davy Holdings Ltd. downgraded Ireland’s largest bookmaker for the first time since June 2009, citing signs that group returns are starting to fall. The stock was cut to underperform from outperform, meaning investors should sell the shares.
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