U.K. Stocks Gyrate as BOE Cuts Rate, Says Slowdown Has Worsened

By Alexis Xydias

Dec. 4 (Bloomberg) -- U.K. stocks swung between gains and losses after the Bank of England cut the benchmark interest rate to the lowest level since 1951 and said an economic slowdown has gathered pace.

Hays Plc and Michael Page International Plc, Britain’s largest recruitment companies, paced losses. Mining companies Rio Tinto Plc and Xstrata Plc fell as copper declined.

The FTSE 100 Index added 9.44, or 0.2 percent, to 4,179.40 at 3:09 p.m. in London, after earlier falling as much as 1.9 percent. The All-Share Index was little changed at 2,072.89. Ireland’s ISEQ rose 2.5 percent.

The central bank’s Monetary Policy Committee reduced the benchmark rate by 1 percentage point to 2 percent, matching the median forecast of 61 economists in a Bloomberg News survey. The rate-setting committee, led by Governor Mervyn King, said money and credit markets remain “extremely difficult,” and consumer spending and business investment has stalled.

“Don’t be fooled that a rate cut alone is the answer to our prayers,” said London-based Felix Riley, head of binaries products at ChoiceOdds, a spread-betting unit of MF Global Ltd. “The bank and the government need to inject life back into the economy in as many ways as possible and this is just a starting step.”

Michael Page slumped 9.3 percent to 175 pence, the steepest retreat since Ocotber, after saying full-year profit will be at the bottom end of analysts’ estimates. Hays, Britain’s biggest recruiter, dropped 10 percent to 64.75 pence.

Reed Elsevier dropped 3.8 percent to 522 pence, snapping two days of gains. The stock was cut to “hold” from “buy” by analysts at Royal Bank of Scotland Group Plc.

Rio Tinto, the world’s third-largest mining company, fell 4.2 percent to 1,100 pence. Xstrata, the world’s fourth-largest copper producer, declined 3.5 percent to 666.5 pence.

Copper for delivery in three months fell as much as 2.2 percent to $3,370 a metric ton on the London Metal Excahnge.

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

Diageo Plc (DGE LN), the world’s largest liquor company, increased 24.5 pence, or 2.7 percent, to 920 pence. U.S. spirits sales rose 9.9 percent on an annual basis in October, according to a report by the National Alcohol Beverage Control Association cited by UBS AG.

New Star Asset Management Plc (NSAM LN) plummeted 3.63 pence, or 76 percent, to 1.12 pence, the biggest decline in the All-Share Index today. The fund manager started by John Duffield in 2000 said lenders will take control after its share price dropped 95 percent in three months.

Portmeirion Group Plc (PMP LN) tumbled 20 pence, or 16 percent, to 102.5. The U.K. maker of Botanic Garden tableware plunged the most in more than 15 years after saying annual profit will miss analysts’ estimates as sales slump in its main U.S. market.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.