U.K. Stocks Drop, Led by Miners; Anglo American, BHP, Rio Fall

By Sarah Thompson

Sept. 1 (Bloomberg) -- U.K. stocks declined for the first time in four days, led by shares of mining companies after metals prices fell. Bodycote Plc fell after Merrill Lynch & Co. recommended selling the shares.

Bradford & Bingley Plc dropped after analysts at Royal Bank of Scotland Group Plc said the U.K. lender that posted a first- half loss on surging funding costs needs to increase customer deposits to be viable.

The FTSE 100 Index lost 35.7, or 0.6 percent, to 5,600.9 at 12:16 p.m. in London. The FTSE All-Share Index slid 0.5 percent. Ireland's ISEQ Index fell 0.9 percent.

U.K. mortgage approvals dropped to the lowest since at least 1999 and manufacturing contracted for a fourth month as the economy staggered toward a recession.

Banks granted 33,000 loans for house purchases in July, the fewest since comparable data began nine years ago, the Bank of England said in London today. An index based on a survey of factories by the Chartered Institute of Purchasing and Supply stayed below 50 in August, indicating contraction.

Anglo American Plc, the world's second-largest mining company, retreated 2.4 percent to 2,863 pence. BHP Billiton Ltd., the largest, fell 1.9 percent to 1,685 pence while Rio Tinto Group, the third-biggest, slid 1.4 percent to 5,156.

``Copper prices in the near term will look to crude oil and the U.S. dollar for direction, with a slight downside bias as stockpiles continue to rise,'' Zeng Chao, chief metals analyst at Everbright Futures Co., wrote in a report.

Bodycote

Copper for delivery in three months slid as much as 2.3 percent to $7,340 a metric ton in London. Platinum, nickel, lead, zinc and aluminum prices also fell.

Bodycote dropped 3.1 percent to 225.5 pence after the U.K. supplier of metal-strengthening services was downgraded to ``underperform'' from ``neutral'' at Merrill Lynch, citing a negative earnings outlook.

Bradford & Bingley lost 2 percent to 48 pence. ``The group's viability from a funding perspective depends critically on its ability to maintain and grow customer deposits,'' said Ian Smillie, a London-based analyst at RBS. He reinitiated coverage of the stock with a ``sell'' rating.

The Bingley, England-based bank, which relies on capital markets rather than branches for more than half its funding, had a 4.1 billion-pound ($7.4 billion) decline in wholesale deposits in the first half, Smillie said. The bank would likely become a takeover target if it shrinks to cut its funding needs, he said.

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

U.K. companies:

Associated British Foods Plc (ABF LN) dropped 3 pence, or 0.4 percent, to 803.5. The owner of British Sugar is negotiating the purchase of Spanish sugar producer Azucarera Ebro, the Mail on Sunday reported, without saying where it got the information.

Headlam Group Plc (HEAD LN) slumped 46.25 pence, or 14 percent, to 287.25. The U.K. distributor of floor coverings founded in 1992 said first-half profit rose 3.9 percent and that it faces a ``challenge'' to meet 2008 goals.

Informa Plc (INF LN) increased 16 pence, or 3.8 percent, to 441.75. The U.K publisher that is in talks about a takeover by private-equity companies was added to the ``most preferred'' list in UBS AG's ``short-term alpha preferences portfolio.''

``Reports in Euroweek suggest that the Providence private equity consortium looking to acquire Informa have their financing in place,'' UBS said. ``We see the risk reward on Informa as attractive given the increasing likelihood a deal will go through.''

RCG Holdings Ltd. (RCG LN) rose 4 pence, or 6.5 percent, to 66. The Hong Kong-based maker of the i-Series fingerprint- recognition products said first-half profit rose 77 percent as it added customers and security products.

Taylor Wimpey Plc (TW/ LN) gained 0.5 pence, or 0.9 percent, to 54.75. The U.K.'s largest homebuilder will this week launch a campaign among institutional investors to broaden its shareholder base in order to raise capital, the Sunday Telegraph reported, without saying where it got the information.

Weir Group Plc (WEIR LN) added 3.5 pence, or 0.4 percent, to 928. The world's biggest maker of pumps for the mining industry sold its Weir Process Equipment Canada unit to Wajax Income Fund for C$25.4 million to focus on oil and gas clients.

Irish companies:

Kenmare Resources Plc (KMR ID) slumped 4.3 cents, or 9.8 percent, to 39.5 cents. The producer of titanium in Mozambique fell the most in more than a month in London trading after production at its Moma mine in the country was less than expected and it raised $30 million in a share sale.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.