By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- London stocks ended mostly lower
Wednesday, unable to shake off a downbeat tone generated by
Washington's budget standoff, though home builders and shares of
Aviva PLC and Kingfisher PLC managed solid gains.
The FTSE 100 index ended the day down 27.92 points, or 0.4%, at
6,337.91.
Decliners outweighed gainers, with Vedanta Resources PLC
tumbling 4.7% after Morgan Stanley cut shares to underweight from
equal-weight, saying shares have re-rated strongly since the start
of January 2012 and valuations look "demanding" now.
Chip designer ARM Holdings PLC (ARMHY) was another decliner,
losing 3.3%.
Downbeat sentiment came as investors fretted over a continued
lack of progress by U.S. politicians in the budget standoff. Stocks
trimmed losses earlier in the day on news that President Barack
Obama will nominate Janet Yellen as the new U.S. Federal Reserve
chairwoman, but U.S. markets were unable to keep a grip on an early
lead.
Meanwhile, the British pound (GBPUSD) dropped below $1.60 and
hit its lowest level versus the dollar since Sept. 18 after data
showed that U.K. factory output unexpectedly fell in August while
the country's trade performance also disappointed.
But home-builders were on the rise after a series of upgrades by
Goldman Sachs. The investment bank said the housing recovery in the
U.K. is underway. "Partly stimulated by the 'Help to Buy' shared
equity scheme, lead indicators such as U.K. mortgage approvals and
RICS Survey data strongly indicate a rebound in activity," said
Goldman analysts.
Persimmon PLC was the top gainer in London, up 5.5% after
Goldman added the home builder to its conviction buy list, along
with Taylor Wimpey PLC and Rightmove PLC . Away from the main
index, Taylor Wimpey rose more than 4% and Rightmove was up
0.3%.
Goldman lifted Bovis Homes Group and Barratt Developments PLC
each to buy from neutral. Also away from the main index, shares of
those companies were up 4%.
Other gainers included Kingfisher PLC , up 1.6%, and Aviva PLC
up 1.3%.
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