By Henrietta Rumberger and Adam Haigh
Sept. 11 (Bloomberg) -- U.K. stocks fell for a third day on renewed concern the slowing U.K. economy and inflationary pressures are weighing on retailers, mortgage lenders and travel companies.
Home Retail Group Plc sank 5.9 percent after Britain's second-largest home-improvement chain reported lower sales. HBOS Plc, the U.K.'s biggest mortgage lender, slid 5.9 percent as Bank of England policy maker David Blanchflower said job losses will triple as the economy slows, while British Airways Plc led a retreat in airline stocks. The U.K.'s two largest drugmakers AstraZeneca Plc and GlaxoSmithKline Plc both dropped more than 2 percent after two brokerages recommended selling the shares.
The FTSE 100 dropped 76.6, or 1.4 percent, to 5,289.6 at 1:04 p.m. in London. The FTSE All-Share Index lost 1.5 percent and Ireland's ISEQ Index retreated 1.9 percent.
``Eyes have now turned back to the underlying difficulties which haven't changed,'' said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which has $21.5 billion under management. ``The general slowdown has meant people are less likely to spend on discretionary items. We need corporate earnings to start improving and this is not happening,'' he added.
The benchmark FTSE 100 today extended its 18 percent slump so far this year as the economy cools and banks from Barclays Plc to Royal Bank of Scotland Group Plc have been forced to raise capital as losses topped $500 billion at financial companies worldwide.
Home Retail retreated the most in two months, down 5.9 percent to 227.5 pence after saying second-quarter same-store sales fell at its Homebase and Argos outlets as a housing slump worsened and consumer confidence slid to a four-year low.
Revenue Drops
Revenue at stores open at least a year declined 5.8 percent at Argos and 8.3 percent at Homebase in the three months ended Aug. 30, the Milton Keynes, England-based company said in a statement.
William Morrison Supermarkets Plc declined 6.1 percent to 253.75 pence, the steepest retreat since 2004. The smallest of the four main U.K. food retailers said first-half profit fell 3.1 percent after income from real-estate sales dwindled and its tax bill rose.
HBOS slid 5.9 percent to 282 pence. Bradford & Bingley Plc, the biggest lender to U.K. landlords, lost 5.5 percent to 39 pence. Blanchflower said in testimony to lawmakers unemployment in Europe's second-largest economy will rise to 60,000 a month, from its current level of 20,000.
British Airways Declines
British Airways, Europe's third-biggest airline, lost 5.4 percent to 246 pence. Ryanair Holdings Plc, the region's largest discount airline, slid 3.6 percent to 2.65 euros.
AstraZeneca fell the most in almost eight months, off 3.9 percent to 2,539 pence. The U.K.'s second-largest drugmaker was cut to ``sell'' from ``neutral'' at Goldman Sachs Group Inc.
``The shares are not supported at current levels by near- term fundamentals and we believe AstraZeneca is likely to underperform its pharma peers,'' London-based analyst John Murphy wrote in a note.
GlaxoSmithKline lost 2.6 percent to 1,246.5 pence. Exane BNP Paribas downgraded the shares to ``underperform'' from ``outperform,'' saying the stock now enters ``a more risky period'' having outperformed the industry by 10 percent during the last three months.
Separately, Moody's gave the European pharmaceutical industry outlook a negative rating for the second straight time, saying drugmakers are struggling to develop products to replace sales lost when the patents expire.
The following stocks also rose or fell in the U.K. markets. Stock symbols are in parentheses.
U.K. companies:
Galliford Try Plc (GFRD LN) slid 2.75 pence, or 4.1 percent, to 63.25. The U.K. construction company that's upgrading Wimbledon's Centre Court tennis stadium said annual profit fell 2.5 percent after it revamped its housing division amid a slump in demand.
Premier Farnell Plc (PFL LN), the U.K. electronic and industrial products supplier founded in 1939, lost 8 pence, or 4.2 percent, to 180.5 after saying sales dropped in the U.S., Europe, and the U.K.
``Results are slightly behind our expectations and, while they detail impressive earnings growth, they also show a continued slowdown in sales growth and lower operating margins,'' Investec Securities analyst Guy Hewett wrote in a note today. ``We expect this negative trend to continue as the economic slowdown bites and now believe the group will do well to maintain earnings next year.''
Irish companies:
Bank of Ireland Plc (BKIR ID) slid 6.3 percent to 5.17 euros, Allied Irish Banks Plc (ALBK ID), lost 2.6 percent to 7.89 euros, and Anglo Irish Bank Plc (ANGL ID) retreated 4.3 percent to 5.13 euros. Dresdner Kleinwort cut its 2009 and 2010 earnings estimates for Irish banks on concern over rising bad debt levels and shortfalls in capital.
To contact the reporters on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net
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