U.K. Stocks Retreat; Tui Travel, Thomas Cook, DSG Drop on Oil

By Sarah Thompson

Sept. 22 (Bloomberg) -- U.K. stocks fell, led by Tui Travel Plc and Thomas Cook Group Plc, Europe's two biggest tour operators, and DSG International Plc as oil prices gained.

Rio Tinto Group and BHP Billiton Ltd. advanced with metals prices and Wolseley Plc jumped after the U.K. building supply distributor said it is ``confident'' it won't break banking covenants and doesn't need to sell shares to raise cash or renegotiate loan terms.

The benchmark FTSE 100 index decreased 10.64, or 0.2 percent, to 5,300.66 at 12:00 p.m. in London. The index surged the most on Sept. 19 since the measure was developed in 1984 after regulators banned short selling of financial companies' shares until January 2009. The FTSE All-Share Index slid 0.3 percent and Ireland's ISEQ Index fell 0.9 percent.

Stocks in Europe retreated as higher oil prices weighed on travel operators and retailers, overshadowing plans by the U.S. government to buy $700 billion of bank assets and a crackdown on bets against financial companies.

``It will take time to work the credit problem out of the system, perhaps as long as another year,'' said Espen Furnes, an Oslo-based fund manager at Storebrand Asset Management, which has the equivalent of $48 billion. ``The liquidity package is like an aspirin against a headache, it doesn't fix the cause of the headache, but makes it easier to live with.''

TUI Travel and Thomas Cook Group both fell 4.5 percent and 4.3 percent to 222.75 pence and 254 pence respectively. DSG, Europe's second-largest consumer-electronics retailer, declined 7.3 percent to 64 pence.

Crude oil rose for a fourth day on speculation the U.S. government's proposed $700 billion rescue plan for the finance industry will shore up demand.

Rio Tinto Gains

Rio Tinto, the world's third-largest oil company, added 2.8 percent to 4,284. BHP Billiton, the biggest, increased 2.1 percent to 1,477. Copper rose to a two-week high in London on speculation that declining stockpiles will spur more demand for the metal in China, the world's largest buyer of the metal. Aluminum and zinc also advanced.

Wolseley jumped 11 percent to 458 pence. The world's biggest distributor of plumbing and heating equipment also said it will review its unprofitable U.S. homebuilding supply unit and doesn't rule out a sale.

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

U.K. companies:

Aero Inventory Plc (AI/ LN) climbed 35.75 pence, or 8.6 percent, to 450. The U.K. aerospace parts-supplier that counts Qantas Airways Ltd. as a customer said full-year profit before tax rose 66 percent as it won more orders from airlines and maintenance contracts.

Expomedia Group Plc (EXP LN) slumped 5 pence, or 11 percent, to 41.5 pence. The largest organizer of conferences in Russia said first-half profit fell 94 percent because of losses at unprofitable businesses it's trying to sell.

International Ferro Metals Ltd. (IFL LN) jumped 4.75 pence, or 8.5 percent, to 60.5. The producer of ferrochrome in South Africa posted a full-year profit following a loss a year earlier.

Kingfisher Plc (KGF LN) increased 1.5 pence, or 1 percent, to 146.4. The U.K. home-improvement retailer is considering moving its headquarters out of the country to avoid paying proposed British corporate taxes, the Sunday Telegraph said.

Peter Hambro Mining Plc (POG LN) lost 101.5 pence, or 13 percent, to 673. The second-biggest gold producer in Russia said first-half profit fell 33 percent as costs rose.

Irish companies:

Irish Life & Permanent Plc (IPM ID) added 36 cents, or 5.9 percent, to 6.498 euros. Ireland's biggest mortgage lender dismissed newspaper speculation it's likely to be the next Irish financial institution to receive a takeover offer.

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