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July 10, 2008, 11:08 p.m. EDT

London Is 22 Points From a Bear Market

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By Sarah Turner

LONDON -- The U.K.'s FTSE 100 index came close to joining other European markets in the bear-market club on another gloomy day for European stocks.

World Stocks

Food and construction companies slid as analysts took a knife to forecasts after pessimistic updates from retailing giant Carrefour and brick maker Wienerberger. The pan-European Dow Jones Stoxx 600 index dropped 2.1% to 277.95, its lowest close in three years. Like many national indexes, it already is in bear territory.

Carrefour slumped 8.6% in Paris to its lowest close in more than five years after the retailer reported slowing sales growth in the second quarter as weaker consumer spending took a toll on business in France. French rival Casino, which reports on Friday, fell 3.3%, and Tesco declined 2.1% in London.

Wienerberger plunged 23% in Vienna after the Austrian building-materials company said six-month sales were weaker than forecast. It now expects fiscal-year profit to fall. The company cited the "collapse" of residential construction in the U.K., a "significantly weaker than expected" U.S. market and "no recovery in sight" in Germany. Austria's ATX index fell 3.1% to 3676.86.

Wienerberger's report weighed on others in the sector. French building-materials company Saint Gobain lost 6% as J.P. Morgan slashed 2008 earnings-per-share forecasts for the firm 9%. Italcementi fell 3% in Milan, and Holcim lost 1.5% in Zurich.

Among major national indexes, the French CAC-40 index fell 2.5% to 4231.56, bringing losses for this year alone to nearly 25%, and the German DAX 30 index lost 1.3% to 6305.00, off 22% this year.

The commodities-heavy U.K. FTSE 100 index dropped 2.2% to 5406.80, leaving it 22.24 points shy of a 20% drop from its recent closing peak on Oct. 12. A decline of 20% is the generally accepted definition of a bear market. The day's close was the lowest since Nov. 2, 2005.

Investors in U.K. shares took in more bad news on the housing market and a critical note on retailers on a day when the Bank of England kept interest rates on hold at 5%.

House prices fell 2% in June from a month earlier, according to the Halifax house-price index, bringing the annual decline to 6.1%. Midcap home builder Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -0.77% said it will cut about 1,200 jobs and scrap its dividend after completions fell 14% in the first half and cancellation rates rose 34%. The stock, after being battered for weeks, jumped 24%.

"I can't think of a better example of what it means to be stuck between a rock and a hard place. Recent news on the growth front has been disappointing...while inflation has shown no sign of subsiding," said Stuart Porteous , head of economics at Royal Bank of Scotland.

Banks gave back gains made Wednesday; Lloyds TSB /zigman2/quotes/200709414/composite LYG -2.84% dropped 4.2%; Barclays /zigman2/quotes/206581728/composite BCS -2.95% lost 3%.

Retailers tumbled after Goldman Sachs downgraded luxury fashion company Burberry /zigman2/quotes/205386705/delayed UK:BRBY +0.79% , jeweler Signet /zigman2/quotes/204614427/composite SIG +1.28% and department store Debenhams to "sell." Burberry led the retreat, falling 6.2%.

Not even discount retailers were immune from the retail selloff. Associated British Foods /zigman2/quotes/204493701/delayed UK:ABF 0.00% , operator of low-cost clothing chain Primark, fell 3.8%.

Food company Cadbury fell 7.5% after Merrill Lynch downgraded the stock to "underperform."

Australia, Shanghai Fall; Tokyo Edges Higher

Australian stocks fell for the third time in four sessions, as investors worried anew about the outlook for major financial companies.

Shanghai stocks also fell, snapping a three-day winning streak. But markets in Tokyo and Hong Kong edged higher.

In SYDNEY , the benchmark S&P/ASX 200 index shed 1.5% to 4937.40, its second-lowest close of the year. The market has dropped 22% in 2008, and traders fear a further slide on Wall Street will drive Australian stocks lower.

Westpac fell 3.2%, and both Commonwealth Bank of Australia /zigman2/quotes/200638713/delayed AU:CBA +0.37% and Australia & New Zealand Banking Group /zigman2/quotes/203732563/composite ANZBY -2.52% shed 2.3%. Conglomerate CSR /zigman2/quotes/208004144/delayed AU:CSR +0.36% dropped 15% after flagging earnings that were well below market expectations.

In CHINA , the Shanghai Composite index, which tracks yuan-denominated Class A shares and foreign-currency Class B shares, fell 1.5% to 2875.45.

Air China /zigman2/quotes/203408003/delayed HK:753 -1.79% slid 4.1% after the Chinese stock-market regulator allowed the airline to issue as many as 400 million Shanghai-listed shares within six months, raising fears of increased supply.

In TOKYO , the Nikkei Stock Average of 225 companies firmed 0.1% to 13067.21. Financial stocks recovered from early losses; Mitsubishi UFJ Financial Group climbed 3.5%.

David Rogers and V. Phani Kumar

Write to Sarah Turner at sarah.turner@dowjones.com

/zigman2/quotes/209812640/delayed
UK : U.K.: London
674.40 p
-5.20 -0.77%
Volume: 1.85M
Jan. 21, 2022 4:35p
P/E Ratio
10.54
Dividend Yield
4.36%
Market Cap
£6.89 billion
Rev. per Employee
£760,262
loading...
/zigman2/quotes/200709414/composite
US : U.S.: NYSE
$ 2.74
-0.08 -2.84%
Volume: 13.05M
Jan. 21, 2022 4:00p
P/E Ratio
7.60
Dividend Yield
2.53%
Market Cap
$49.80 billion
Rev. per Employee
$762,158
loading...
/zigman2/quotes/206581728/composite
US : U.S.: NYSE
$ 10.86
-0.33 -2.95%
Volume: 7.96M
Jan. 21, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
1.49%
Market Cap
$45.20 billion
Rev. per Employee
$358,588
loading...
/zigman2/quotes/205386705/delayed
UK : U.K.: London
1,925.50 p
+15.00 +0.79%
Volume: 1.43M
Jan. 21, 2022 4:35p
P/E Ratio
16.57
Dividend Yield
2.81%
Market Cap
£7.70 billion
Rev. per Employee
£276,993
loading...
/zigman2/quotes/204614427/composite
US : U.S.: NYSE
$ 80.00
+1.01 +1.28%
Volume: 4.59M
Jan. 21, 2022 4:00p
P/E Ratio
7.28
Dividend Yield
0.90%
Market Cap
$4.21 billion
Rev. per Employee
$331,853
loading...
/zigman2/quotes/204493701/delayed
UK : U.K.: London
2,042.00 p
0.00 0.00%
Volume: 902,500
Jan. 21, 2022 4:35p
P/E Ratio
33.75
Dividend Yield
1.31%
Market Cap
£16.14 billion
Rev. per Employee
£108,414
loading...
/zigman2/quotes/200638713/delayed
AU : Australia: Sydney
$ 97.73
+0.36 +0.37%
Volume: 584,876
Jan. 24, 2022 12:24p
P/E Ratio
17.98
Dividend Yield
3.58%
Market Cap
$165.99 billion
Rev. per Employee
$680,586
loading...
/zigman2/quotes/203732563/composite
US : U.S.: OTC
$ 20.08
-0.52 -2.52%
Volume: 53,703
Jan. 21, 2022 3:59p
P/E Ratio
13.03
Dividend Yield
5.08%
Market Cap
$56.89 billion
Rev. per Employee
$457,046
loading...
/zigman2/quotes/208004144/delayed
AU : Australia: Sydney
$ 5.65
+0.02 +0.36%
Volume: 469,190
Jan. 24, 2022 12:23p
P/E Ratio
11.29
Dividend Yield
4.96%
Market Cap
$2.73 billion
Rev. per Employee
$860,993
loading...
/zigman2/quotes/203408003/delayed
HK : Hong Kong
$ 6.02
-0.11 -1.79%
Volume: 12,000
Jan. 24, 2022 9:20a
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$149.10 billion
Rev. per Employee
$1.02M
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