By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks fell Wednesday, holding to
losses as investors assessed the closely watched Autumn Statement,
a wide-ranging update from the government on the state of the U.K.
economy and future government plans.
The FTSE 100 was down 0.2% at 6,729.88, off session lows after
U.K. Treasury chief George Osborne delivered his statement to
members of parliament.
But the British benchmark dipped lower during Osborne's
presentation as he said the government will change rules on bank
profits that it expects will increase banks' contribution to public
finances through tax payments.
Shares of Royal Bank of Scotland PLC fell by as much as 1.8%,
before swinging back to a gain of 0.1%. Shares of HSBC PLC lost
0.3%, Barclays PLC fell 0.3% and Lloyds Banking Group PLC declined
0.9%. Shares of Asia-focused Standard Chartered PLC were higher by
1.4%.
However, shares of budget carrier easyJet PLC picked up 1.9%,
and British Airways' parent International Consolidated Airlines
rose 1%, on the government's plan to exempt children from tax on
economy-class flights.
Most housing stocks on the FTSE 100 as well as on the FTSE 250
index rose on the government's plan to switch to a progressive rate
of tax on residential properties, saying that the stamp duty will
be cut for 98% of those who pay it.
Shares of home builder Persimmon PLC climbed 0.9%, but were off
their best levels. Barratt Developments PLC gained 1.6%, and Bovis
Homes Group PLC added 2.1%. But Berkeley Group Holdings PLC fell
2.4% as buyers of high-end homes will pay more under the new
rules.
Sterling: The pound rose against the U.S. dollar as it appeared
bulls liked the"austerity talk" from Osborne. Sterling pushed near
$1.57 after Osborne said he would continue to cut welfare spending,
said Kathleen Brooks, a research director at Forex.com, in a note.
The pound (GBPUSD) later climbed to $1.5713, compared with $1.5666
ahead of the Treasury chief's appearance.
"Overall, we think the [Autumn Statement] is mildly
pound-positive in the short term, but the main boost to the pound
this afternoon was not Osborne, but a weaker dollar after the ADP
employment report for November missed expectations," Brooks
wrote.
Private-sector employers expanded their workforce by a
seasonally adjusted 208,000 jobs in the U.S., the fewest since
August, according to ADP. The gain missed forecasts from economists
polled by Dow Jones Newswires, who had expected an increase of
223,000.
The pound had marched higher early Wednesday after U.K.
service-sector growth was stronger than expected in November.
Markit and the Chartered Institute of Procurement & Supply said
the services-activity index rose to 58.6 from 56.2 in October,
supported by "firm demand and rising volumes of new business."
Analysts had widely expected a reading of 56.5.
Elsewhere, Royal Dutch Shell (RDSB) shares fell 1%. The shares
on Tuesday jumped 3.8%, and that surge was "clearly a reaction to
the oil price's move off the lows and to brokers' notes suggesting
that energy stocks are attractive at these levels," said Bill
McNamara, technical analyst at Charles Stanley, in a daily
update.
"That might be true, but they surely become less attractive the
longer Brent crude hovers around the $70 level," he said. "In
short, shareholders should be prepared for further volatility in
the near term."
Brent crude for January delivery traded at $70.79 a barrel.
Tullow Oil PLC shares lost 0.5%, but BP PLC turned up 1%, and BG
Group PLC reversed course to rise 0.4%.
The FTSE 100 on Tuesday jumped 1.3%, its best gain since early
November.
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