U.K. Stocks Drop, Led by British Airways; 3i Group Declines

By Adam Haigh

Sept. 24 (Bloomberg) -- U.K. stocks fell amid concern a six-month rally in equities has outpaced the prospects for growth in earnings and the economy.

British Airways Plc sank 2.8 percent as Citigroup Inc. downgraded the shares. 3i Group Plc, Europe’s biggest publicly traded private equity firm, declined 3.8 percent after the pace of new investments dropped 75 percent as a lack of debt financing brought the buyout market close to a near-halt.

The benchmark FTSE 100 Index slipped 41.61, or 0.8 percent, to 5,097.76 as of 8:31 a.m. in London, bringing this week’s retreat to 1.5 percent so far. The FTSE All-Share Index fell 0.8 percent and Ireland’s ISEQ Index dropped 1.4 percent.

The FTSE 100 index has rebounded 45 percent since March 3 as companies from HSBC Holdings Plc to GlaxoSmithKline Plc reported results that beat estimates and economic releases added to evidence that the worst of the global recession may be over.

British Airways sank 2.8 percent to 223.5 pence. Citigroup Inc. downgraded the shares to “hold” from “buy,” saying mid- cycle share-price valuations were reached “far earlier than expected,” according to a note to clients.

3i Group dropped 3.8 percent to 277 pence. 3i spent 155 million pounds ($254 million) on new investments in the five months through August, compared with 622 million in the same period a year earlier.

London Stock Exchange Group Plc lost 2.7 percent to 855.5 pence as Europe’s oldest independent bourse said the daily value of its trades declined 43 percent for the five months ending Aug. 31.

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