By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. equities fell Tuesday, swept lower
with other European markets as the conflict in Ukraine escalated.
Also putting some pressure on the benchmark index was Diageo PLC as
the drinks maker sought control of an Indian liquor company.
The FTSE 100 fell 0.6% to 6,541.61, wiping out Monday's rise of
0.3%.
The decline picked up pace late in afternoon trade following
reports about military activity in the Ukraine, stoking fears that
the country is on the brink of a civil war. The Stoxx Europe 600
index fell by 1% to 326.58, and Russia's benchmarks each lost at
least 2.5%.
Contributing to the FTSE's pullback throughout the session were
shares of Diageo . They ended down 0.4% as the British company and
a Dutch unit offered $1.9 billion to buy another 26% stake in
United Spirits Ltd. The Indian company's brands include McDowell's
No. 1, Black Dog Scotch whisky and Pinky vodka. A successful bid
would push Diageo's stake in United Spirits to nearly 55%.
At the same time, shares of G4S dropped 3% after Deutsche Bank
said it doesn't see significant "hidden value" in G4S to warrant
the security company's current valuation, and downgraded its rating
on G4S to sell from hold. "We expect a lower Group growth profile
in this cycle despite benefits from [emerging markets] exposure. We
see limited scope for large cost saving surprises," wrote Deutsche
Bank analysts. "We trust the new management's plans for the
business can improve operating results however in our view the
benefits are more than priced in."
But Imperial Tobacco Group picked up 0.3% after the said 900
jobs will be lost as part of its restructuring effort.
On the economic front, U.K. inflation slowed in March to its
lowest annual rate since October 2009. Annual inflation was 1.6% in
March, down from 1.7% in February, said the Office for National
Statistics. The Bank of England's inflation target is 2%.
"Considering the movements in producer prices, we believe that
inflation is unlikely to move up in the coming months," said ICICI
Bank in a note Tuesday, adding that it expects the Bank of England
to hold monetary policy unchanged this year.
The ONS separately said U.K. housing prices climbed 9.1% in
February from the year-ago period, higher than the 6.8% annual rate
in January.
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