U.K. Stocks Bounce Between Gains and Losses; BA Shares Retreat

By Adam Haigh

Dec. 18 (Bloomberg) -- U.K. stocks swung between gains and losses as the failure of British Airways Plc merger talks overshadowed speculation U.S. President-elect Barack Obama will seek approval for an $850 billion stimulus plan to revive the economy.

British Airways, Europe’s third-largest airline, dropped 1.1 percent after it was unable to reach an agreement on “key terms” over a merger with Qantas Airways Ltd. GlaxoSmithKline Plc, which made more than 44 percent of its sales in the U.S. last year, added 1.1 percent as an adviser to the president-elect Obama may ask Congress next year to approve a stimulus plan.

The benchmark FTSE 100 Index added 6.39, or 0.1 percent, to 4,330.58 at 1:00 p.m. in London. The FTSE All-Share Index climbed 0.3 percent and Ireland’s ISEQ Index slid 1.7 percent.

“The collapse of the British Airways talks are getting negative reaction in the short term, but it shows there is one industry where we will see consolidation next year,” said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. “We need to see all the intervention from the authorities working it’s way through as there is no escaping concerns going into next year about the extent of the economic slowdown.”

The benchmark FTSE 100 has slumped 33 percent this year as more than $1 trillion in global losses and writedowns at financial firms froze credit markets and sent the U.S., Europe and Japan into the first simultaneous recessions since World War II.

British Airways Drops

British Airways dropped 1.1 percent to 170.2 pence. The two airlines halted negotiations after British Airways Chief Executive Officer Willie Walsh and his Qantas counterpart Alan Joyce couldn’t reach agreement on who would control the company, Tony Cane, a spokesman for the London-based carrier, said.

GlaxoSmithKline, the world’s second-biggest drugmaker, added 1.1 percent to 1,213 pence. Unilever, the world’s second-largest consumer-products company which made 33 percent in the Americas last year, added 3.3 percent to 1,555 pence.

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

Arriva Plc (ARI LN), the operator of the U.K.’s longest train route, added 4 percent to 569 pence after saying the group’s revenue will increase about 50 percent for the full year and there will be ‘significant’ earnings growth, as the company expected.

Marks & Spencer Group Plc (MKS LN), Britain’s largest fashion retailer, fell 2.25 pence, or 1 percent, to 225.25 on concern that discounts on products from coats to champagne may be failing to halt a decline in holiday sales.

Morgan Sindall Plc (MGNS LN) climbed 9.9 percent to 565.5 pence after the U.K.’s biggest supplier of office interiors said it is well placed to achieve long-term growth and sees record profit in the current year.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net