U.K. Stocks Fall on Economy Concern; Barclays, Rio Shares Slide

By Michael Patterson

Dec. 3 (Bloomberg) -- U.K. stocks fell after service industries contracted at the fastest pace in at least 12 years, consumer confidence dropped and a private U.S. payrolls report showed companies cut more jobs than forecast.

Barclays Plc lost 3.7 percent and Marks & Spencer Group Plc declined 2.6 percent as the services and confidence reports added to evidence the U.K. recession is deepening. Rio Tinto Group retreated 12 percent as copper slid and ABN Amro Holding NV cut its 2009 profit estimate for the third-biggest mining company.

The benchmark FTSE 100 Index dropped 49.99, or 1.2 percent, to 4,072.87 at 1:48 p.m. in London. The FTSE All-Share Index declined 1.3 percent and Ireland’s ISEQ Index slipped 0.2 percent.

“This financial crisis and credit crunch and everything related to it, is severely impacting the real economy,” said Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management. “It is hitting every sector.”

The FTSE 100 has retreated 37 percent this year as mortgage- related losses and frozen credit markets forced the government to rescue banks and pushed the economy into a recession.

Barclays, the U.K.’s third-biggest bank, dropped 5.6 pence to 146.9.. Marks & Spencer, the U.K.’s largest clothing retailer, fell 5.75 pence to 219 pence. TUI Travel Plc, Europe’s largest tourism company, slid 3.7 percent to 203.25 pence.

Sentiment Falls

A index based on a survey of about 700 service companies fell to 40.1, the lowest since the gauge began in 1996, Markit and the Chartered Institute of Purchasing and Supply said today. Nationwide Building Society said consumer confidence fell to the lowest since at least 2004.

Companies in the U.S. eliminated an estimated 250,000 jobs in November, the most since November 2001, ADP Employer Services said. The ADP report was forecast to show a decline of 205,000, according to the median estimate of 22 economists in a Bloomberg News survey.

Separately, Marks & Spencer said it will hold its second one-day sale in as many weeks tomorrow. The company will offer 20 percent off clothing, homeware, Christmas cakes and some wine.

Rio fell 150 pence to 1,120. ABN Amro Holding NV cut its 2009 profit forecast 36 percent, citing declining commodity prices. Copper dropped 4.4 percent in London, while Zinc and Nickel also slid.

Stagecoach Group Plc, owner of the U.K.’s largest rail franchise, lost 19 percent to 139.3 pence after predicting “downward pressure” on profits through 2010. The Perth, Scotland-based company said it would reduce the headcount in its rail businesses.

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

U.K. companies:

3i Group Plc (III LN) dropped 4.1 percent to 373.75 pence. Europe’s largest publicly traded private equity firm will announce it will cut about 15 percent of its staff, the Financial Times reported, without saying where it got the information. The London-based firm didn’t immediately respond to calls made by Bloomberg after normal office hours.

New Star Asset Management Group Ltd. (NSAM LN) slipped 15 percent to 5.75 pence. The U.K. money manager trying to renegotiate its debt was dropped from the list of funds recommended by financial advisers Bestinvest Brokers Ltd. and Hargreaves Lansdown Plc.

Irish companies:

Anglo Irish Bank Corp. (ANGL ID) dropped 16 percent to 79 cents. Ireland’s third-biggest lender by assets said fiscal-year profit dropped 33 percent as it put aside 500 million euros ($635 million) in provisions for future loan losses. Earnings missed the median estimate of six analysts surveyed by Bloomberg.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.