By Polya Lesova
British stocks dropped on Tuesday, breaking their multisession
winning streak, as shares of Barclays PLC came under selling
pressure after the banking giant announced the appointment of a new
chief executive.
The mining sector also posted losses after Australia's Labor
Party was able to form a minority government, escalating worries
that a proposed tax on resource companies would be implemented.
The FTSE 100 index fell 0.9% to 5,392.42 points in afternoon
trading. It gained 0.2% in the previous session.
"If you look at the rally the market has had over the last 10
days or so, we've had a very strong and aggressive rally and there
will always be some profit-taking," said Adam Stark, director of
trading at Central Markets in London.
Shares of Barclays dropped 3.1%, making the bank one of the top
decliners in the main index.
Barclays announced that Robert Diamond will become its new group
chief executive starting early next year. He will succeed John
Varley, who has been at the helm since 2004.
"Clients aren't that impressed with that [Diamond's]
appointment," Stark said. "That has caused a sell-off across the
other banks as well."
Shares of Lloyds Banking Group PLC fell 2.2% and those of Royal
Bank of Scotland Group slipped 2%.
The broader decline for the U.K. banking sector came as European
lenders also lost ground amid worries about how regulators will
implement new capital requirements.
Shares of HSBC Holdings PLC (HBC) bucked the negative trend,
trading little changed. HSBC said that Chairman Stephen Green will
step down from his post to become the U.K.'s minister of state for
trade and investment.
Also in the financial sector, shares of investment-management
firm Man Group PLC fell 3.8%, hit by concerns that August was a
difficult month for fund managers.
In the telecommunications sector, shares of Cable & Wireless
Worldwide PLC dropped 3.8%. They had gained in the previous session
following a media report that Singapore Telecoms is considering a
bid for the firm.
Miners fall as Australia forms government
The Australian Labor Party on Tuesday gained enough seats to
form a minority government, ending several weeks of political limbo
triggered by an inconclusive election.
"Before the market opened, we had the appointment of the new
Australian government," said Stark from Central Markets. "One of
their major points is introducing tax plans on the mining
companies. That has caused a selloff in the miners today."
Shares of Vedanta Resources PLC slipped 1.4% and Eurasian
Natural Resources Corp. fell 2.3%. Rio Tinto PLC declined 2.3%.
Shares of U.K. online grocer Ocado Group PLC tumbled 6.2%, even
as it reported a 30% increase in quarterly sales. The firm recently
went public in a troubled initial offering.
In other trading, shares of Whitbread PLC fell 0.6%. The U.K.
hotel and restaurant group said its total group sales rose 14% in
the 24 weeks to Aug. 19.
Shares of U.K. tour operator TUI Travel PLC dropped 1.5%.
Goldman Sachs cut its rating on the stock to neutral from buy,
saying it sees better value elsewhere in the sector.
Bucking the negative trend, shares of Tullow Oil rose 2.4%, as
rumors swirled in the market that the firm may become the subject
of a takeover bid.