U.K. Stocks Decline, Led by Xstrata, Rio Tinto; Cookson Falls

By Sarah Jones

Jan. 29 (Bloomberg) -- U.K. stocks retreated, led by a sell off in mining companies after Xstrata Plc said it plans to raise $5.8 billion to pay down debt and buy assets.

Xstrata plunged 15 percent after Europe’s largest zinc producer said it plans to raise the cash in a two-for-one rights offer. Rio Tinto Group and BHP Billiton Ltd. fell more than 5 percent. Cookson Group Plc tumbled 26 percent after the company announced plans to raise money in a share sale to reduce debt.

The benchmark FTSE 100 slipped 45.12, or 1.1 percent, to 4,250.08 at 8:38 a.m. in London. The broader FTSE All-Share Index lost 1 percent, while Ireland’s ISEQ Index retreated 2 percent.

Xstrata dropped 90.5 pence to 532.5 pence, the steepest fall in more than three months. The company announced plans to raise 4.1 billion pounds ($5.8 billion) in a rights offer to pay down debt and buy Colombian coal assets from Glencore International AG, its largest shareholder. Xstrata will offer investors about 1.96 billion shares at 210 pence each.

Rio Tinto, which yesterday did not rule out the “potential to issue equity” to help cut debt by $10 billion, fell 5.9 percent to 1,519 pence. BHP, the world’s largest mining company, lost 5.1 percent to 1,255 pence.

Cookson plunged 22.5 pence to 62.50 pence, the lowest since at least 1988. The world’s biggest maker of ceramic linings for metal smelters announced plans to raise about 240 million pounds in a share sale to reduce debt and remain within banking terms.

-- Editors: Roger Neill

To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.