U.K. Stocks Close Little Changed as FTSE 100 Erases Drop

U.K. stocks erased losses in the last half hour of trading, leaving the FTSE 100 Index (UKX) little changed, as a rally in British Sky Broadcasting Group Plc (BSY) and SABMiller Plc (SAB) offset Dagong Global Credit Rating Co.'s downgrade of U.S. sovereign debt.

BSkyB climbed to its highest price since March 2001 after quarterly revenue topped estimates. SABMiller rose 4.2 percent after saying quarterly beer sales returned to growth. Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) led banks lower as Exane BNP Paribas said a need for further capital will delay dividend payments at British lenders.

The FTSE 100 Index added 4.57 points, less than 0.1 percent, to 6,576.16 in London. The gauge advanced 3.7 percent in the past five days as investors speculated a last-minute deal over borrowing and spending measures would prevent a U.S. default. The broader FTSE All-Share Index and Ireland's ISEQ Index were also little changed today.

"Equities are going to start to refocus on fundamentals," Andrew Goldberg, a London-based global markets strategist at JPMorgan Asset Management, which manages $1.5 trillion, said by telephone. "Now that the debt limit is out of the way, the next thing the market wants to see is earnings growth."

Beijing-based Dagong downgraded the U.S. government's local and foreign-currency credit ratings to A- from A, maintaining a negative outlook. Republicans and Democrats don't have a consistent strategy to solve America's debt problem and the political situation isn't conducive for eliminating the risk of default, Dagong said.

Default Risk

The government reopened after 16 days of partial shutdown and called back workers sent on unpaid leave as President Barack Obama signed into law a measure to extend the borrowing powers into early 2014. Both chambers of Congress approved the plan earlier. Without such a deal, the Treasury faced the risk of defaulting on its obligations later this month.

A release today showed U.K. retail sales including fuel rose 0.6 percent in September after falling 0.8 percent in the previous month. The median estimate in a Bloomberg survey had called for an increase of 0.4 percent.

BSkyB climbed 7.1 percent to 940 pence. The U.K.'s largest pay-TV provider reported first-quarter revenue that beat estimates as the company signed more customers to its broadband service and Sky+ HD boxes.

SABMiller rose 4.2 percent to 3,167 pence. The world's second-biggest brewer said the so-called organic lager volume rose 3 percent in the second quarter, reversing a 1 percent decline in the first quarter.

Fund Flows

Man Group Plc (EMG) advanced 3.6 percent to 85.85 pence. The world's largest publicly traded hedge-fund manager posted its first quarterly net inflows in two years as clients added money to funds at its GLG Partners unit. Sales of Man Group's funds totaled $4.1 billion in the third quarter, exceeding $3.4 billion of redemptions.

A measure of U.K. banks dropped 1 percent. Barclays declined 1.9 percent to 278.3 pence. HSBC slid 1.1 percent to 678 pence. British lenders may have to raise additional capital of 100 billion pounds ($161 billion) if the Prudential Regulation Authority adopts its proposals in full, Exane said in a note.

Travis Perkins Plc (TPK) lost 1.6 percent to 1,749 pence. The builders' merchant said its consumer division failed to grow on a comparable basis in the third quarter, slipping from an 8.6 percent increase in the two months ended June.

Renishaw Plc (RSW) tumbled 5.7 percent to 1,580 pence, its lowest price since Aug. 7. The maker of precision tools said revenue for the quarter ended in September fell to 79 million pounds from 95.9 million pounds in the year-ago period.

Rank Group Plc (RNK) fell 2.6 percent to 150 pence, falling for a fifth day. The casino operator said it expects full-year operating profit to be marginally below analysts' projection.