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U.K. Stocks Decline; Vodafone, Taylor Wimpey Lead the Retreat

By Adam Haigh

May 27 (Bloomberg) -- U.K. stocks dropped for a third day, led by Vodafone Group Plc after Morgan Stanley said it expects earnings per share growth at the world's largest mobile-phone company to be ``very limited.''

Homebuilders including Taylor Wimpey Plc and Barratt Developments Plc dropped after research company Hometrack Ltd. said home values fell for an eighth month in May and will probably decline further. GlaxoSmithKline Plc retreated as Morgan Stanley advised investors to sell shares of Europe's largest drugmaker.

The benchmark FTSE 100 Index lost 29.10, or 0.5 percent, to 6,058.2 at 1:00 p.m. in London. The FTSE All-Share Index declined 0.5 percent and Ireland's ISEQ Index also slid 0.5 percent.

Vodafone retreated 1.2 percent to 161.4 pence. Earnings per share growth would be ``very limited,'' Morgan Stanley analysts including Nick Delfas wrote in a note to clients, without stating a time-period.

The comments came after Vodafone said Chief Executive Officer Arun Sarin will step down and be replaced by his deputy Vittorio Colao as it reported a record profit of 6.66 billion pounds ($13.2 billion).

Taylor Wimpey, the U.K.'s largest homebuilder, fell 4.7 percent to 92 pence. The average cost of a residential property in England and Wales slipped 0.5 percent in May while prices retreated 1.9 percent from a year earlier, the biggest decline since November 2005.

Barratt Developments, the U.K.'s second-biggest house builder by volume, tumbled 6.9 percent to 204.75. Citigroup Inc. is selling shares valued at 14.6 million pounds ($28.8 million) in Barratt.

GlaxoSmithKline lost 1.9 percent to 1,099.5 pence. Morgan Stanley downgraded the shares to ``underweight'' from ``equal- weight,'' citing possible delays to U.S. approval of its Cervarix cervical cancer vaccine.

The following stocks also rose or fell in the U.K. and Irish markets. Stock symbols are in parentheses.

U.K. Companies:

Johnson Matthey Plc (JMAT LN) added 43 pence, or 2.4 percent, to 1,916 after it was upgraded to ``buy'' from ``neutral'' by Merrill Lynch analysts which cited higher prices for platinum-group metals and oil.

Moss Bros Group Plc (MOSB LN) slumped 5.5 pence, or 12 percent, to 40 pence. Baugur Group Hf, the Icelandic owner of U.K. fashion brands Karen Millen and Oasis, said it scrapped its 40 million-pound offer for the suit retailer.

Northern Foods Plc (NFDS LN) rose 2 pence, or 2.3 percent, to 88. The largest U.K. maker of prepared meals posted an annual profit of 34.5 million pounds after raising prices and selling units last year.

SABMiller Plc (SAB LN) added 91 pence, or 7.4 percent, to 1,315 pence, the biggest increase since July 2005. The world's third-largest brewer rose after the Financial Times reported InBev NV is weighing a merger between the companies. Nigel Fairbrass, a spokesman for SABMiller, and InBev spokeswoman Marianne Amssoms both declined to comment today on the article.
http://www.bloomberg.com/apps/news?pid=20601102&sid=a7sHOuj5pi9Y&refer=uk