David Buik Comments: UK Stocks Retreat As Tullow Oil, BP, BHP Billiton, Rio Tinto Shares Drop - Bloomberg

U.K. stocks dropped for a second day, sending the FTSE 100 Index to a seven-week low, as basic- resources companies fell and worse-than-forecast U.S. economic data added to concern about the world’s largest economy. Rio Tinto Group and BHP Billiton Ltd. dropped at least 2 percent as base metals declined in London. Tullow Oil Plc lost 4.6 percent after it said that a tax dispute between Heritage Oil Plc and the Ugandan government may delay its acquisition of Heritage’s assets in the country. Aggreko Plc, the worst performing stock on the FTSE 100 Index, plunged 5.8 percent after being downgraded by Numis Securities Ltd.

The benchmark slid 0.9 percent to 5,109.4 at the 4:30 p.m. close in London. The gauge has slipped 5.6 percent since Aug. 9 as reports on jobs and manufacturing in the U.S. pointed to a slowdown in the economy, while the Federal Reserve said the pace of recovery will be “more modest” than forecast. The FTSE All- Share Index declined 0.9 percent today, while Ireland’s ISEQ Index gained 0.6 percent.

“All the news from the U.S. is discouraging news,” said David Buik, a London-based market strategist at BGC Partners. “There were awful new home sales and terrible durable goods orders. It really is no more complicated than that.”

U.S. Economy

Stocks declined as report showed orders for durable goods increased less than forecast in July, a sign one of the few remaining bright spots in the U.S. economy is cooling. A separate report showed new-home sales slid to a record low in July.

Rio Tinto, the world’s third-biggest miner, and BHP Billiton, the biggest, dropped 1.8 percent to 3,105 pence and 2 percent to 1,767 pence, respectively. Copper, lead, nickel, tin and zinc prices retreated on the London Metal Exchange. The companies are part of a “small universe” of potential rivals able to bid for Potash Corp. of Saskatchewan Inc., said BHP Chief Executive Officer Marius Kloppers.

Tullow Oil fell 4.6 percent to 1,238 pence, the stock’s largest decline since June, after the U.K. explorer with the most licenses in Africa said the Ugandan government had withheld approval of its $1.5 billion acquisition of Heritage’s interest in two blocks in the Lake Albert basin. Tullow hopes to pump more than 200,000 barrels of oil a day from the blocks by 2014 or 2015.

The tax dispute could delay work “in the very short term,” Tullow said in a statement. The company also reported first-half net income that more than doubled to $81.7 million.

Aggreko, Yell

Aggreko lost 5.8 percent, the most since June 2009, to 1,346 pence. The world’s largest provider of mobile power-supply equipment was downgraded to “Reduce” from “Hold” at Numis Securities by equity analyst Mike Murphy. Net income in the first half of the year was 87.4 million pounds, up from 71.9 million pounds a year earlier, the company said today in a statement.

Yell Group Plc plunged 7.4 percent to 14.85 pence. The publisher of the U.K.’s yellow pages directories, which has fallen 62 percent this year, has been deleted from the benchmark Stoxx Europe 600 Index. The move will take effect from Sept. 20.

Admiral Group Plc advanced 2.7 percent to 1,512 pence. Europe’s best-performing insurance stock this year said first- half net income rose 21 percent as it reported a record number of customers and increased its prices.

Serco Group Plc gained 4.8 percent, the most since February, to 586.5 pence. The operator of London’s Docklands Light Railway and a service provider for the U.S. Navy will seek more contracts to run prisons in the U.K. as the government seeks to cut costs.

In Dublin, Paddy Power soared 2.5 percent to 26.66 euros. Ireland’s biggest bookmaker said it expects to beat the consensus of analysts’ estimates for the year after “strong” first-half growth in its online and U.K. retail units.

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