U.K. Stocks Drop for a Third Day as Shire Plunges

U.K. stocks retreated for a third day as investors awaited a summit of European Union leaders later this week in Brussels.

Shire Plc (SHP) tumbled 11 percent, the largest decline on the benchmark FTSE 100 Index, after the Food and Drug Administration approved a generic version of its second-biggest selling treatment for use in the U.S. SABMiller (SAB) Plc fell 1.7 percent after the stock was downgraded.

The FTSE 100 dropped 63.04, or 1.1 percent, to 5,450.65 at the close in London, extending its slide from the beginning of this year to 2.2 percent. The gauge has declined 5.5 percent so far this quarter. The broader FTSE All-Share Index lost 1.2 percent today, while Ireland’s ISEQ Index slipped 0.9 percent.

“In this febrile atmosphere, there is little that seems capable of lifting markets from their gloom,” Chris Beauchamp, a market analyst at IG Index in London, wrote in a note. “With yields on Spanish and Italian bonds creeping higher once again, the stage is now being well set up for this week’s summit.”

U.K. stocks slipped 1 percent on June 22 led by a selloff in mining and energy companies, as base metals dropped amid signs of a global economic slowdown.

The volume of shares changing hands on FTSE 100 (UKX) companies was 14 percent lower than the average of the last 30 days, data compiled by Bloomberg showed.

Germany will face an increasingly united bloc of euro-area nations demanding more ambitious policies to help the currency zone’s most debt-stricken members. The leaders of the 27 EU states will attend pre-summit meetings as they work to narrow their differences before the June 28-29 meeting.

Spanish Yields

Yields on Spain’s two-year notes climbed 42 basis points, or 0.42 percentage point, to 4.86 percent, their biggest increase in a week. Similar-maturity Italian yields jumped 53 basis points to 4.33 percent.

A report today showed that demand for new houses in the U.S. increased in May more than economists had estimated. Sales climbed to a 369,000 annual rate, 7.6 percent higher than the 343,000 pace in April. That beat the median estimate of 347,000 in a Bloomberg News survey.

Shire slumped 11 percent to 1,743 pence after the FDA approved a generic version of the drugmaker’s attention-deficit hyperactivity disorder treatment Adderall XR. Brian Bourdot, an analyst at Barclays Plc (BARC), cut his profit forecast for the Dublin- based company by 14 percent.

SABMiller Slips

SABMiller, the world’s second-biggest brewer by volume, fell 1.7 percent to 2,462.5 pence. The stock was cut to sell from hold at Liberum Capital Ltd. The brokerage cited the increased likelihood that Anheuser-Busch InBev NV, the world’s largest brewer, will buy Grupo Modelo SAB.

BT Group Plc (BT/A), the U.K.’s largest fixed-line telephone company, dropped 2 percent to 201 pence. The stock was downgraded to neutral from buy at Citigroup Inc.

Lloyds Banking Group Plc (LLOY) and Barclays Plc led bank shares lower, falling 3.1 percent to 30.41 pence and 3.2 percent to 194.25 pence, respectively. Royal Bank of Scotland Group Plc (RBS) lost 2.6 percent to 236.8 pence. Standard Chartered Plc (STAN) slid 2.3 percent to 1,354.5 pence. A gauge of European lenders fell 3 percent, the biggest decline of the 19 industry groups in the Stoxx Europe 600 Index. (SXXP)

Essar Energy Plc (ESSR), an Indian power producer and oil refiner that trades in London, tumbled 7.8 percent to 116 pence after the High Court of Gujarat rejected the company’s petition to change a tax ruling. Essar said it may appeal to the Supreme Court of India.

Morrison Slips

William Morrison Supermarkets Plc, the smallest of the U.K.’s four biggest supermarket chains, slid 1.3 percent to 264.8 pence, its fifth day of losses. The company said Richard Pennycook, its group finance director, will leave at the end of June 2013.

BHP Billiton Ltd. (BHP) fell 2.5 percent to 1,726 pence and Rio Tinto Group (RIO) slipped 3.7 percent to 2,872.5 pence as UBS lowered its earnings estimates for both companies by 4 percent because of Australia’s taxes on mining and carbon.

Evraz Plc (EVR), the largest steelmaker in Russia, dropped 5 percent to 254.7 pence and Kazakhmys Plc declined 4 percent to 674 pence.

Cohort Plc (CHRT) surged 21 percent to 107.5 pence, its biggest rally in a year. The British provider of technical services to defense and security companies reported full-year profit of 4.6 million pounds ($7.2 million). Cohort also said one of its units won a five-year extension for a managed IT services contract from a joint venture led by the Ministry of Defence.

ITM Power Plc (ITM) advanced 6.3 percent to 56.75 pence. The fuel-cell developer said it sold its first hydrogen-generation system to the European Aeronautic Defence & Space Co.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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