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 on the state of the U.K. economy and the
government's policy plans.
The FTSE 100 fell 0.4% to 6,716.63 after U.K. Treasury chief
George Osborne delivered the Autumn Statement to members of
parliament.
The British benchmark dipped to intraday lows during Osborne's
presentation as he said the government will change rules on how it
taxes banks' profits, which he expects will increase banks'
contribution to public finances.
Shares of Royal Bank of Scotland PLC fell by as much as 1.8%
before swinging back to a gain of 0.1%. Lloyds Banking Group PLC
declined 1%, HSBC PLC lost 0.4% and Barclays PLC fell 0.6%. Shares
of Asia-focused Standard Chartered PLC ended 1.5% higher.
However, shares of budget carrier easyJet PLC picked up 2.5%,
and British Airways' parent International Consolidated Airlines
rose 1.3%, on the government's plan to exempt children from taxes
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 tax
rate 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 1%, Barratt
Developments PLC gained 1.8%, and Bovis Homes Group PLC added 1.7%.
But Berkeley Group Holdings PLC fell 3% 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 $1.5707, 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 started rising 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 1.4%. 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 $70.27 a barrel.
Tullow Oil PLC shares lost 0.9%, but BP PLC turned up 0.7%, and
BG Group PLC reversed course to rise 0.1%.
The FTSE 100 on Tuesday jumped 1.3%, its best gain since early
November.
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