U.K. Stocks Decline, Led by BSkyB and ITV; Lloyds TSB Retreats

By Sarah Jones

June 26 (Bloomberg) -- U.K. stocks dropped, led by media companies after JPMorgan Chase & Co. recommended investors sell holdings in British Sky Broadcasting Group Plc and Morgan Stanley cut its price estimate for Thomson Reuters Corp.

Lloyds TSB Group Plc led a retreat by banks as Goldman Sachs Group Inc. warned of additional writedowns at Citigroup Inc.

The FTSE 100 Index fell 68.8, or 1.2 percent, to 5,597.30 at 12:31 p.m. in London. The FTSE All-Share Index lost 1.2 percent and Ireland's ISEQ Index declined 1.5 percent.

BSkyB retreated 3.8 percent to 476 pence, the lowest since January 2004. JPMorgan downgraded the U.K.'s biggest pay- television provider to ``underweight'' from ``overweight.''

``High-margin advertising revenues could slow given the deteriorating macro environment,'' London-based analyst Mark O'Donnell wrote in a note to investors. ``High-margin revenue streams are underperforming.''

ITV Plc, the U.K.'s largest commercial broadcaster, lost 4.1 percent to 50.3 pence.


Thomson Reuters, formed by Thomson Corp.'s $15.9 billion purchase of Reuters Group Plc, lost 5.1 percent to 1,366 pence.

Morgan Stanley reduced its price estimate 9.9 percent to 1,280 pence and maintained its ``underweight'' recommendation on the shares.

``Our negative growth forecast is predicted on the ongoing retrenchment in investment bank headcount and market data spend,'' London-based analyst Patrick Wellington wrote in a note.

Bloomberg LP competes with Thomson Reuters in selling information and trading systems to the financial-services industry.

Lloyds TSB, the biggest provider of checking accounts in the U.K., declined 5.5 percent to 310.5 pence. HSBC Holdings Plc, Europe's largest bank by market value, fell 2.2 percent to 796.5 pence.

Goldman Sachs downgraded Citigroup to ``neutral'' saying the U.S. bank may take an additional $8.9 billion in net writedowns in the second quarter.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

Avesco Group Plc (AVS LN) lost 7.5 pence, or 9.8 percent, to 69, the steepest decline since 2003. The U.K. provider of large video screens for concerts posted a first-half loss.

Regent Inns Plc (REG LN) dropped 1.5 pence, or 23 percent, to 5, the lowest since at least 1993. The U.K. owner of the Walkabout pub chain said talks on a potential offer for the company have ended after suitors were unable to obtain funding because of the credit crunch.

The company also said pretax profit will be ``minimal'' before one-time items for the fiscal year ending June 28 because of a ``substantial'' drop in same-outlet sales at its entertainment unit.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.