U.K. Stocks Are Little Changed; Anglo American Shares Retreat

By Adam Haigh and Alexis Xydias

Oct. 15 (Bloomberg) -- U.K. stocks were little changed after Xstrata Plc dropped a proposed bid for Anglo American Plc, offsetting gains in insurance companies.

Anglo American fell 2 percent after Xstrata walked away from the proposed 29.6 billion-pound ($48 billion) deal. RSA Insurance Group Plc, the U.K.’s biggest non-life insurer, and Old Mutual Plc climbed after BofA Merrill Lynch Global Research recommended buying the insurers’ shares.

The benchmark FTSE 100 Index slid 6.63, or 0.1 percent, to 5,249.47 as of 10:16 a.m. in London. The FTSE All-Share Index lost 0.1 percent and Ireland’s ISEQ Index dropped less than 0.1 percent.

A seven-month rally in equities has gathered pace since the third-quarter earnings season started this month, amid speculation profits at companies will beat estimates. Nokia Oyj in Finland and Golden Sachs Group Inc. in the U.S. are among today’s largest companies reporting results.

“At this point, we are factoring in a lot of good news,” said Simon Denham, managing director at Capital Spreads in London. If results “are good, nobody is going to be surprised. I would almost say we are now in a situation where bad news or even flat news will have a worse effect than good news would have a positive one.”

Anglo American dropped 2 percent to 2,265 pence. Xstrata pulled out of the merger with Anglo American five days before a deadline for it to male a formal bid or walk away.

“It is regrettable that the board of Anglo American immediately rejected our approach, without engaging with Xstrata,” Xstrata Chief Executive Officer Mick Davis said in a statement. “The compelling strategic rationale for a merger of the two companies remains undiminished.”

RSA gained 1.9 percent to 135.5 pence. BofA Merrill Lynch raised its rating on the U.K.’s biggest non-life insurer to “buy” from “neutral,” saying the company “is one of the most cash-generative stocks in European insurance.”

Old Mutual added 1.2 percent to 114.3 pence. The largest insurer in Africa was raised to “buy” from “neutral” at BofA Merrill Lynch, which said the company may resume dividends to shareholders from full year 2010.

To contact the reporters on this story: Adam Haigh in Hong Kong at ahaigh1@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.