In Europe: U.K. Stocks Decline For Second Day As Spanish Yields Rise

9 July 2012


Markets likely to be under far more scrutiny in the wake of rate-fixing probe.

U.K. stocks fell for a second day as Spanish bond yields surged before euro-area finance ministers meet in Brussels to discuss measures to contain the region’s sovereign-debt crisis.

Michael Page International Plc retreated 4.1 percent after the U.K. recruitment company reported a decline in profit. Xstrata Plc (XTA) dropped 2.4 percent as the Sunday Times reported the company will delay a vote on a merger with Glencore International Plc (GLEN) until September.

The FTSE 100 Index (UKX) lost 15.21 points, or 0.3 percent, to 5,647.42 at 11:56 a.m. in London. The gauge gained 1.6 percent last week as the Bank of England expanded its bond-buying program and surveys of manufacturing in economies from China to the euro area beat economists’ estimates. The broader FTSE All- Share Index slid 0.3 percent today, while Ireland’s ISEQ Index slipped 0.5 percent.

“Euro-zone finance ministers meet in Brussels, ostensibly to build on the decisions announced at the summit two weeks ago,” Chris Beauchamp, a market analyst at IG Index in London, wrote in a note. “As if to underline the urgency of their discussions, yields for Spanish and Italian bonds are on the march again, although this latest meeting is likely to end with a statement of intent but little else.”

The yield on Spain’s benchmark 10-year bond rose to 7.067 percent, the highest since June 19, at 12:54 p.m. in Madrid. That was above the 7 percent threshold that prompted full bailouts ofGreece, Ireland and Portugal.

Euro-area finance ministers meet in Brussels to discuss crisis-fighting measures adopted by leaders of the 17 euro nations last month.

Output, Confidence

A U.K. output index fell in June to a level indicating the economy will continue to shrink, while business confidence dropped to the lowest this year, according to BDO LLP.

The gauge estimating output over the coming quarter declined to 94.8 from 96.7 in May, while the sentiment measure fell to 93.5 from 95.5, the accountancy firm said in a report published today in London. The output index is below the 95 mark that points to positive growth in three months, “suggesting more difficult economic terrain is ahead,” BDO said.

Michael Page (MPI) dropped 4.1 percent to 349.6 pence. The company said gross profit declined 6.6 percent in the second quarter from the same period a year earlier and forecast the third quarter will be “challenging.” Rival Hays Plc fell 3.2 percent to 70.55 pence.

Commodity Shares

Xstrata lost 2.4 percent to 814 pence. The company will delay a vote on its merger with Glencore until September, the Sunday Times reported yesterday. Talks with Qatar Holding LLC, the investment arm of the country’s sovereign-wealth fund, on the price of the deal may continue for weeks, the Financial Times reported today without saying where it got the information. Glencore fell 1.4 percent to 306 pence.

Lonmin Plc, the third-biggest platinum producer, and Evraz Plc, the largest steelmaker inRussia by output, fell 3.2 percent to 704.5 pence and 1.4 percent to 242.8 pence, respectively. A gauge of commodity shares was the worst performer of the 19 industry groups on the Stoxx 600 Europe Index.

Burberry Group Plc, the U.K.’s largest luxury-goods maker, fell 3 percent to 1,251 pence. The company reports first-quarter sales on July 11.

Kenmare Slumps

Kenmare Resources Plc dropped 6.6 percent to 35.66 pence in London, its lowest price in seven months, after Australian peer Iluka Resources cut its sales outlook for the second-half of the year.

JJB Sports Plc (JJB), the U.K. retailer trying to survive with funding from Dick’s Sporting Goods Inc., tumbled 21 percent to 7.75 pence after saying this year’s European soccer championships failed to provide the same stimulus to revenue as previous major tournaments.

“Sales have fallen materially short of expectations,” also affected by rainy weather, the Wigan, England-based retailer said. Sales at stores open at least a year fell 8 percent in the 22 weeks ended July 1.

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