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U.K. FTSE 100 Drops After Pound Soars; HSBC, Kingfisher Slide
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By Poppy Trowbridge and Jason Carey
Nov. 24 (Bloomberg) -- The U.K. FTSE 100 Index declined after the pound surged to its highest in almost two years against the dollar.
``All equity markets are responding to the currency movements,'' said Grahame Exton who helps manage $5 billion at Tilney Investment Management in Liverpool. ``Generally, a weak dollar does put more pressure on central banks. A weaker dollar does have an inflationary impact.''
HSBC Holdings Plc, Europe's biggest bank by market value, led a retreat by banks. Kingfisher Plc fell after Deutsche Bank AG lowered its recommendation on the shares. Marks & Spencer Group Plc declined following a report U.K. retail sales may barely grow over the Christmas holiday.
The FTSE 100 lost 17.9, or 0.3 percent, to 6122.10 at the close in London, bringing its drop to 1.1 percent this week. The FTSE All-Share Index fell 11.74, or 0.4 percent, to 3148.68. Ireland's ISEQ Index slid 26.8, or 0.3 percent, to 8872.70.
HSBC declined 8 pence, or 0.8 percent, to 968. Barclays Plc, the U.K.'s third-biggest bank by market value, dropped 7.5, or 1.1 percent, to 692 pence. HBOS Plc, Britain's biggest mortgage lender, declined 9, or 0.8 percent, to 1060 pence.
The pound surged to its highest in almost two years against the dollar on speculation the Bank of England will continue lifting interest rates to curb inflation. Against the dollar, the pound was at $1.9308 at 4:46 p.m. in London from $1.9165 late yesterday and $1.8946 a week ago. It earlier touched $1.9351, the highest since Dec. 31, 2004.
`Currency Movements'
``Currency movements appear to be underlying the current market decline,'' said Keith Bowman, a U.K. equity analyst at Hargreaves Lansdown in Bristol, England. ``There is not much to concentrate on in terms of earnings. The market is looking to other factors.''
Minutes from the Bank of England's latest rate-setting meeting showed the nine-member committee, led by Governor Mervyn King, voted 7-2 in favor of raising the key rate by a quarter point to a five-year high of 5 percent.
Lloyds TSB Group Plc, the U.K.'s fifth-largest bank by market value, dropped 7, or 1.3 percent, to 554.5 pence after Morgan Stanley downgraded the shares to ``equal-weight'' from ``overweight.'' The brokerage set a price estimate of 575 pence.
Kingfisher slipped 6.75 pence, or 2.3 percent, to 249.75. Deutsche Bank lowered its recommendation on the stock to ``sell'' from ``hold.'' The bank cited lower expected profits from Kingfisher's B&Q chain of home improvement stores.
``B&Q's profits are not likely to rebound as fast as the market expects,'' Deutsche Bank analyst Rod Whitehead wrote in a note. ``The shares are ahead of events.''
``With evidence pointing to a more cautious consumer, there is every possibility that consumers will start to reign in their spending even before Christmas,'' Richard Perks, Mintel's director of retail research, wrote in the report.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Adept Telecom Plc (ADT LN) slumped 33.5 pence, or 33 percent, to 69.5. The U.K. telecommunications provider whose shares have halved in the past six months said its fiscal-year results will be below market expectations because of ``increased competition.''
Eckoh Technologies Plc (ECK LN) slipped 1 pence, or 8.2 percent, to 11.25. The U.K. maker of speech-recognition software said takeover talks with an unidentified third party have been terminated.
Inion Oy (IIN LN) dropped, slipping 1 pence, or 3.9 percent, to 24.75. The Finnish maker of biodegradable medical implants whose shares trade in London said it won't meet sales targets for 2006.
Kiln Plc (KIN LN), a Lloyd's of London insurer, climbed 1.25 pence, or 1.2 percent, to 106. The company said the performance of its insurance pools from 2005 is ``very stable'' after last year's record storm losses.
Monstermob Group Plc (MOB LN) slid 5 pence, or 10 percent, to 42.75. Yesterday, the U.K. provider of cell phone ring tones and logos said it's ``unlikely'' to receive a takeover offer.
Regency Inns Plc (REG LN) dropped 1.25 pence, or 1.4 percent, to 87.5. The bar, comedy club and restaurant company said the late-night entertainment market continues to be ``highly competitive.'' The company also plans to sell its remaining 27 Old Orleans restaurants.
Robinson Plc (RBN LN), a maker of packaging for clients including Nestle SA, retreated 12.5 pence, or 14 percent, to 75 after the company said contracts with Goldenfry Foods Ltd. won't be renewed.
Trifast Plc (TRI LN) rose 3 pence, or 4.5 percent, to 70. The U.K. maker of industrial fasteners said fiscal first-half profit surged 86 percent after the company passed increased metals costs to clients and cut jobs to save money following an acquisition.