By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — U.K.’s benchmark stock index dropped the most in three months on Monday as shares of Vodafone Group PLC declined after a broker downgrade, while the broader stock market slumped on political worries in Spain and Italy.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +1.95% slid 1.6% to 6,246.84, erasing a 1.1% gain from Friday.
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Shares of Vodafone /zigman2/quotes/202484985/delayed UK:VOD -1.17% /zigman2/quotes/202862751/lastsale VOD -2.62% , down 1.7%, weighed on the index after Citigroup cut the wireless telecom firm to neutral from buy, highlighting near-term revenue pressure and elevated acquisition risks.
Mining firms were also under selling pressure as metals prices traded mixed. Shares of Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +5.63% lost 2.8%, BHP Billiton PLC /zigman2/quotes/208108397/lastsale BHP -0.97% /zigman2/quotes/201448516/delayed AU:BHP +3.42% fell 2.1% and Rio Tinto PLC /zigman2/quotes/208934945/delayed UK:RIO +1.21% /zigman2/quotes/202627887/lastsale RIO +1.45% /zigman2/quotes/200083756/delayed AU:RIO +3.80% slipped 1.7%. See: Gold futures slide as firmer dollar adds pressure
Shares of Randgold Resources Ltd. bucked the negative trend among miners and jumped 3.1%. Randgold Chief Executive Mark Bristow said he expects the company to beat its output target a year ahead of schedule. See: Randgold CEO expects to exceed gold output target
Oil firms were under pressure as oil prices declined. Shares of BP PLC /zigman2/quotes/207305210/lastsale BP +1.96% fell 2.2% and Royal Dutch Shell PLC /zigman2/quotes/204253697/delayed UK:RDSB +7.75% /zigman2/quotes/207682964/lastsale RDS.B +4.05% erased 2.4%. See: Oil futures fall over 1% after last week’s rally
The losses in London came as political events in Spain and Italy spooked investors in European financial markets. In Spain, the opposition party called on Prime Minister Mariano Rajoy to resign after allegations of receiving secret payments, while uncertainly over the outcome of upcoming Italian elections mounted as former Prime Minister Silvio Berlusconi gained in opinion polls. See: Spain yields rise as Rajoy aims to contain scandal
Banks posted steep losses, joining a risk-off mode across other European bourses. Shares of Royal Bank of Scotland Group PLC /zigman2/quotes/209265718/delayed UK:RBS -3.83% /zigman2/quotes/203233010/lastsale RBS -6.53% dropped 3.5%, Standard Chartered PLC /zigman2/quotes/200125072/delayed UK:STAN -2.13% lost 2.4% and sector heavyweight HSBC Holdings PLC /zigman2/quotes/203901799/delayed UK:HSBA -1.82% /zigman2/quotes/202687335/delayed HK:5 -6.68% shaved off 1.9%.
Barclays PLC shares /zigman2/quotes/208409333/delayed UK:BARC +0.12% /zigman2/quotes/206581728/lastsale BCS -2.58% fell 2.8%. The bank said its Group Finance Director Chris Lucas and group general counsel plan to retire, but agreed to stay until successors have been appointed. See: Barclays finance director Chris Lucas to retire
Among other notable decliners in London, Johnson Matthey PLC /zigman2/quotes/207054035/delayed UK:JMAT +0.62% gave up 3.6% after Citigroup cut the chemicals firm to neutral from buy, citing competitive pressure and worries over the growth outlook.
Outside the main index in London, shares of Stagecoach Group PLC /zigman2/quotes/206082799/delayed UK:SGC +3.79% dropped 2.6% as HSBC cut its recommendation on the bus company’s shares to neutral from overweight.
Peer firm Go-Ahead Group PLC /zigman2/quotes/201418493/delayed UK:GOG +7.34% was lifted to overweight from underweight, helping send its shares 0.4% higher.