U.K. Stocks Decline From 16-Month High; Marks & Spencer Drops

By Julie Cruz

Jan. 6 (Bloomberg) -- U.K. stocks retreated from a 16-month high as Marks & Spencer Group Plc declined and consumer confidence fell the most in more than a year.

Marks & Spencer, the UK’s largest clothing retailer, slid 4.7 percent after reporting a sales increase that some analysts said missed estimates. Petrofac Ltd. dropped 2.8 percent as Morgan Stanley recommended investors sell the stock. Royal Bank of Scotland Group Plc posted the biggest gain in the benchmark FTSE 100 Index.

The FTSE 100 slipped 12.19, or 0.2 percent, to 5,510.31 as of 9:30 a.m. in London, erasing an earlier gain of 0.2 percent. The FTSE All-Share Index slipped 0.2 percent and Ireland’s ISEQ Index climbed 0.2 percent.

The FTSE 100 surged 22 percent in 2009 for its biggest annual rally since 1997. The gauge has rebounded 57 percent since March 3 as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy.

U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said. The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said. A measure of consumers’ economic expectations in the next six months fell eight points to 101.

Marks & Spencer Drops

Marks & Spencer slumped 4.7 percent to 385.7 pence, the biggest intraday drop in almost three months. The retailer said revenue at stores open at least a year rose 0.8 percent in the fiscal third quarter ended Dec. 26. The sales were “marginally below” estimates, according to Morgan Stanley analysts. Marks said that unlike last year, the figures didn’t include the first day of its clearance sale, which would have added 1 percent to the sales growth.

Consumer spending this year will reflect “continuing economic uncertainty,” Chairman Stuart Rose said in a statement. Rose also said his replacement as chief executive officer, Marc Bolland, may not join for at least two months. Bolland still has to agree a date for his departure from William Morrison Supermarkets Plc, Rose said.

Petrofac slid 2.8 percent to 1,002 pence as the oil and gas facilities service provider was downgraded to “underweight” from “equal weight” at Morgan Stanley.

RBS, recipient of the world’s biggest banking bailout, climbed 3.1 percent to 36.49 pence, the best performance in FTSE 100.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net