U.K. Stocks Decline, Led by SABMiller; Barclays Shares Fall

By Sarah Jones

Jan. 19 (Bloomberg) -- U.K. stocks retreated to the lowest level this year as SABMiller Plc, the world’s second-biggest brewer, reported beer volumes that missed analysts’ estimates and the inflation rate jumped.

SABMiller fell the most in seven months. Barclays Plc slid 2.4 percent after Credit Suisse Group AG said Britain’s second- biggest bank may need to raise more capital. Cadbury Plc jumped 3.3 percent after Kraft Foods Inc. agreed to buy the U.K. chocolate maker.

The benchmark FTSE 100 Index declined 42.75, or 0.8 percent, to 5,451.64 at 12:15 p.m. in London, on course for the lowest close since Dec. 31. The FTSE All-Share Index dropped 0.8 percent, while Ireland’s ISEQ Index retreated 0.9 percent.

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

“After yesterday’s broad-base strength, a degree of caution has returned to stock markets today,” Philip Gillett, a sales trader at IG Index in London, wrote. “The broader market seems more concerned with U.K. inflation data coming in higher than expected, increasing expectations that a rise in interest rates will need to be made by the year end.”

Consumer prices climbed 2.9 percent from a year earlier, 1 percentage point more than in November, the Office for National Statistics said. The median estimate of economists in a Bloomberg survey was for 2.6 percent inflation.

SABMiller Declines

SABMiller lost 2.9 percent to 1,767 pence, the steepest intraday slide since June. The brewer said beer volumes, stripping out acquisitions and disposals, were unchanged in the third quarter. That missed the median analyst estimate for a 1 percent increase in a Bloomberg News survey.

Barclays declined 2.4 percent to 310.05 pence as Credit Suisse cut its share price estimate for the lender by 13 percent to 350 pence. The bank may need to raise 17 billion pounds ($28 billion) to meet new capital requirements over the next three years, according to London-based analyst Jonathan Pierce.

“Our numbers suggest a potential sizeable capital deficit,” Pierce wrote in a report today, keeping his “outperform” rating on the stock.

HSBC Holdings Plc, Europe’s biggest bank, slipped 2.4 percent to 682.4 pence after Exane BNP Paribas downgraded the shares to “underperform” from “neutral.”

Cadbury jumped 3.3 percent to 834 pence. Cadbury’s board agreed to an 11.9 billion-pound ($19.7 billion) takeover offer from Kraft after the U.S. company raised its bid, ending more than four months of resistance.

Burberry Group Plc rallied 3.8 percent to 622 pence. The U.K.’s largest luxury retailer reported third-quarter sales growth that beat estimates and said full-year pretax profit will be “towards the top end” of analysts’ forecasts.

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