U.K. FTSE 100 Falls to Three-Month Low; Anglo American Slumps

By Sarah Jones

Feb. 20 (Bloomberg) -- The U.K.’s FTSE 100 Benchmark Index dropped below 4,000 to a three-month low, after Anglo American Plc suspended its dividend as earnings slumped, sparking a sell off in mining companies.

Anglo American, which controls the world’s biggest platinum producer, dropped 15 percent after posting earnings that missed analysts’ estimates. British Airways Plc fell as Qantas Airways Ltd. had its credit rating cut by Moody’s Investors Service. BP Plc retreated more than 3 percent as crude oil slipped.

The FTSE 100 Index sank 100.12, or 2.5 percent, to 3,918.25 at 12:17 p.m. in London, the lowest since Nov. 21. The benchmark has retreated 6.5 percent this week as Bank of England Deputy Governor John Gieve said policy makers are fighting to protect Britain from the threat of a decade-long depression.

The FTSE All-Share Index fell 2.5 percent today, while Ireland’s ISEQ Index lost 3.1 percent.

“We have had a tsunami of bad news that is knocking us over,” said David Buik, a London-based markets analyst at BGC Partners. “It’s going to be another desperate session and is dominated by results from Anglo American. The outlook is not particularly good.”

Anglo American slumped 15 percent to 1,045 pence after the company suspended dividend payments and share buybacks and announced plans to slash 19,000 jobs to retain cash.

Full-year net income dropped 29 percent to $5.2 billion while so-called underlying earnings fell to $4.36 a share, missing analysts’ estimates of $4.82.

Rights Offer

Rio Tinto Group, the world’s third-largest mining company, dropped 7.7 percent to 1,843 pence. The London-based Times reported Rio’s independent directors may be seeking the views of its 20 biggest British investors on the possibility of a multibillion-pound rights offer following strong opposition to the company’s plan to raise $19.5 billion from Aluminum Corp. of China.

BHP Billiton Plc, the world’s largest mining company, declined 2.4 percent to 1,152 pence. Xstrata Plc, the world’s largest copper producer, retreated 7 percent to 669.5 pence.

Copper accelerated declines on the London Metal Exchange as stockpiles of the metal jumped to a five-year high, reviving speculation that demand is falling more quickly than supplies. Zinc and nickel also dropped.

BP, Europe’s second-largest oil company by market value, lost 3.4 percent to 466.75 pence. Royal Dutch Shell Plc, the biggest, slipped 2 percent to 1,667 pence.

Crude oil fell, paring its largest gain in seven weeks, as stock markets in Europe and Asia dropped on concern the recession is deepening.

British Airways Retreats

British Airways, Europe’s third-largest airline, declined 4 percent to 127.1 pence. Moody’s cut its credit rating on Qantas, Australia’s largest carrier, by one level to Baa2 as the global recession hammers demand for air travel.

The downgrade may make it more expensive for the Sydney- based carrier to refinance A$1.9 billion ($1.2 billion) of bonds due up to 2016, as it also seeks funds to help pay for A$35 billion of new planes on order.

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

Cattles Plc (CTT LN) plunged 5.94 pence, or 45 percent, to 7.31. The U.K. provider of subprime loans said pretax profit may be “substantially” below analyst estimates after it reviews bad-loan provisions. The company will delay releasing earnings until the inquiry into provisions is completed.

Centaur Media Plc (CAU LN) dropped 9.75 pence, or 29 percent, to 24 after the U.K. publisher of Money Marketing and The Lawyer magazines said full-year profit will probably be “significantly below the board’s expectations” because of a decline in recruitment advertising.

Prudential Plc (PRU LN) rallied 28.25 pence, or 11 percent, to 284.75, one of four stocks to rise on the FTSE 100. The U.K.’s second-largest insurer reported a 34 percent drop in fourth- quarter revenue to 3.7 billion pounds after lower sales in Asia.

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