U.K. Stocks Drop, Led by Energy Producers; HSBC, ICAP Retreat

By Sarah Thompson

Nov. 13 (Bloomberg) -- U.K. stocks declined for a third day, led by energy producers, after crude oil fell below $55 a barrel and metals prices slid as the global economic slump cuts demand for fuel and crimps the outlook for corporate earnings.

BP Plc, Europe's second-largest oil company, and BHP Billiton Ltd. dropped. HSBC Holdings Plc slid after Cazenove recommended selling shares in Europe's biggest bank on global recession concerns.

The benchmark FTSE 100 Index lost 45.88, or 1.1 percent, to 4,136.14 at 12:53 p.m. in London. The FTSE All-Share Index declined 1.1 percent and Ireland's ISEQ Index climbed 0.4 percent.

The German economy, Europe's largest, contracted more than economists expected in the third quarter, confirming it has entered its worst recession in at least 12 years as the global financial crisis curbs exports.

``Equity markets remain very fragile on this further evidence of the dire state of the global economy,'' said Nick Brind, a London-based money manager at New Star Asset Management, which oversees about $25 billion. ``This is further reflected by the collapse in oil and commodity prices.''

BP, Europe's second-largest oil company, slid 3.1 percent to 461.5 pence. Royal Dutch Shell Plc, the biggest, lost 0.9 percent to 1,585 pence.

Crude oil for December delivery earlier fell as much as $1.49, or 2.7 percent, to $54.67 a barrel, the lowest since Jan. 30, 2007.

BHP Billiton Ltd., the world's largest mining company, slipped 3.3 percent to 917.5 pence. Rio Tinto Group, the second- biggest, dropped 1.8 percent to 2,501 pence.

Copper Tumbles

Copper tumbled to the lowest in more than three years, as global stockpiles climbed to the highest since 2004, adding to evidence a deteriorating global economy is reducing demand for industrial metals.

HSBC retreated 3 percent to 678.75 pence. The lender was cut to ``underperform'' at Cazenove to reflect a ``recession in several of HSBC's major geographic markets, together with continued high levels of impairment at HSBC Finance.''

ICAP Plc, the biggest interbank broker, and rival Tullett Prebon Plc dropped 17 percent to 236.75 pence and 6.1 percent to 161.25 pence respectively. Morgan Stanley downgraded both stocks to ``underweight,'' citing a ``tough revenue outlook.''

``We expect revenue declines of 5-25 percent by product in 2009 following our work with heads of trading/sales and consultants,'' the analysts wrote in a research note dated today.

`Solid'

BT Group Plc jumped 9.3 percent to 123 pence after the U.K.'s largest phone company said it aims to cut about 6 percent of its workforce in the year through March to improve profitability after reporting second-quarter earnings.

``BT's results are solid,'' said Jesper Kruger, a fund manager in Copenhagen at ATP, which has about $64 billion. ``This is helping European telecoms today as many were expecting more negative news from BT after the November profit warning.''

Vodafone Group Plc, the world's biggest mobile-phone company, increased 1.1 percent to 123.3 pence.

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

U.K. companies:

BAE Systems (BA/ LN) gained 4.5 pence, or 1.4 percent, to 338.25. The defense company is in talks to sell up to 24 Eurofighter Typhoon fighter aircraft to Oman in a deal worth at least 1.4 billion pounds ($2.1 billion), the Financial Times reported, citing unidentified people in the U.K. defense industry close to the negotiations.

Catlin Group Ltd. (CGL LN) increased 9.5 pence, or 2.6 percent, to 371.5. The owner of the largest insurance unit at Lloyd's of London said premium revenue rose in the first nine months of the year as international sales climbed.

Intertek Group Plc (ITRK LN) advanced 9.5 pence, or 1.3 percent, to 753.5. The world's largest tester of consumer goods said 10-month sales grew 27 percent on acquisitions and rising demand from toy, petroleum and mineral clients.

London Stock Exchange Group Plc (LSE LN) slid 66.5 pence, or 12 percent, to 513. Europe's oldest independent market reported fiscal first-half profit that trailed some analysts' estimates.

SABMiller Plc (SAB LN) added 6 pence, or 0.7 perecnt, to 911.5. The world's third-largest brewer said it may scrap projects in slowing markets from eastern Europe to Colombia as costs soar and demand wanes.

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