LONDON MARKETS: U.S. Losses, Lloyds, Royal Dutch Weigh On London
Barclays (NYSE:BCS)
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Today : Wednesday 1 June 2011
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By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- London stocks broke a five-session winning streak Wednesday, as disappointing U.S. data intensified losses concentrated in banks such as Lloyds Banking Group PLC and oil giant Royal Dutch Shell PLC.
The FTSE 100 index closed down 1% at 5,928.61 after five consecutive sessions of gains. The index fell 1.3% for May, its worst monthly performance since March.
Losses for London intensified as Wall Street stocks sold off in the wake of a disappointing gauge of manufacturing activity and a private-sector payroll report.
Economic data in the U.K. also weighed on sentiment. The manufacturing purchasing managers survey for May fell to a 20-month low of 52.1 from 54.4 in April, according to a survey by Markit and the Chartered Institute of Purchasing & Supply.
"The fall in the PMI is in line with our negative outlook on the U.K. economy, and our growth forecasts remain at 1.3% for both 2011 and 2012," said analysts at Exane BNP Paribas.
A top decliner was Lloyds Banking Group PLC , which fell 3.8%, continuing losses seen in the prior session. Morgan Stanley said in a research note earlier in the day that Lloyds is most exposed to its prediction of a 10% fall in U.K. house prices, as it sees valuations stretched and the outlook for household real income weak. Morgan Stanley expects 21% lower profit before tax for Lloyds than consensus in 2012.
Shares of Barclays PLC (BCS) also dropped, losing 2.5% and Royal Bank of Scotland Group PLC (RBS) fell 1.8%.
