By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks clung close to the flatline
Thursday, as property developers jumped but Barclays PLC hit a
19-month low amid U.S. legal problems.
U.K.'s FTSE 100 index ended up less than 2 points at 6,735.12,
but swung between gains and losses during the session.
Housing stocks ranked among the session's best performers after
the Bank of England outlined measures aimed at cooling the U.K.'s
housing boom. Housing stocks this week had come under pressure
ahead of the bank's announcement, but on Thursday, Persimmon PLC
was pushed up 5% and Barratt Developments PLC climbed 4.8%.
The central bank's Financial Policy Committee said in its report
that debt levels for households haven't yet posed a risk to the
stability of the financial system, but that it wants to take steps
to head off potential risks.
"The implication is that the market is not out of control," said
Toby Nangle, head of multi-asset allocation at Threadneedle
Investments in London, in a telephone interview. "By phrasing the
macroprudential controls in the way that they have, for many people
who've been long housing stocks and long sterling, it's given a bit
of cause for relief," he said.
Sterling (GBPUSD) rose above the $1.70 level against the U.S.
dollar in the wake of the housing proposals.
House prices in the U.K. have risen nearly 10% in the year to
April, according to the Office for National Statistics.
Among other property developers, British Land Co. rose 1.4%. Off
the benchmark, Taylor Wimpey PLC gained 5.2% and Berkeley Group
Holdings PLC rose 3.2%.
The day's best price performance came from a 6.2% rise in London
Stock Exchange Group shares after the exchange operator said it's
buying Frank Russell Co., a U.S.-based stock-index and
asset-management business, for $2.7 billion. The stock-index unit
of Russell is behind the Russell 2000 (RUT) gauge of small-cap
stocks.
Barclays shares (BCS) put in the worst performance on the index,
falling 6.5% to GBP2.15 ($3.66) to trade at levels not seen since
November 2012, according to FactSet data. The decline was set off
after New York Attorney General Eric Schneiderman on Wednesday said
he's filing a civil lawsuit over how the bank operates its dark
pool. Dark pools, private trading platforms that allow for block
trades, are designed to allow firms to make anonymous trades
without disclosing their hands.
The lawsuit alleges Barclays dramatically increased the market
share of its dark pool through a series of false statements to
clients and investors about how, and for whose benefit, Barclays
operates its dark pool.
Litigation costs "are a challenge to Barclays executing its
strategic plan, as they put pressure on the capital base, which
based on our estimates pro forma for litigation, is the weakest of
the peer group," said Credit Suisse in a note Thursday.
Credit Suisse estimates banking-sector litigation costs of $104
billion, up from its $58 billion estimate the year before, "and we
see upward risk to this estimate. We have seen banks with legacy
litigation risk starting to materially underperform those less
exposed."
Elsewhere in the banking sector, Standard Chartered PLC fell
4.3% after warning its first half operating profit will be 20%
lower than a year earlier. Trading conditions mainly in financial
markets have been "difficult," the bank said in a statement.
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