By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K.'s benchmark stock index dropped
from a more than five-year high on Wednesday, as tobacco firms
declined after reports of a branding ban in the U.K., while
Vodafone Group PLC rallied on Verizon Communications Inc.
reports.
The FTSE 100 index lost 0.1% to close at 6,427.64, after rising
to the highest level since January 2008 on Tuesday.
Shares of Imperial Tobacco Group PLC (ITYBY) lost 2.4%, on the
back of an article in the Guardian saying the U.K. government will
introduce plain-packaging laws for cigarette packets later this
year.
"The news is likely to be an immediate negative for IMT, but we
think much of the impact is in the price. Either way, this feels
like 'high noon,' and we expect a strong legal challenge," Martin
Deboo, analyst at Investec Securities, said in a note.
Shares of British American Tobacco Group PLC (BTI) lost 1.3%.
See: U.K. plain-packaging support bruises tobacco firms
Banks also added pressure, as investors sold more risk-sensitive
assets. Shares of Standard Chartered PLC dropped 3.3%, Barclays PLC
(BCS) shaved off 1.7% and Royal Bank of Scotland Group PLC (RBS)
fell 1.2%.
Associated British Foods PLC slipped 1.1%, as Exane BNP Paribas
cut the firm to underperform from neutral.
On a more upbeat note in London, Vodafone (VOD) rallied 6.8%,
after Bloomberg News late Tuesday reported that Verizon
Communications (VZ) is considering several options involving its
relationship with the U.K. telecom giant. The options range from
ending the wireless venture to a full merger, the report said.
Vodafone owns a 45% stake in the Verizon Wireless subsidiary, while
Verizon holds the rest. A representative from Vodafone declined to
comment. See: Vodafone up 5% on report Verizon mulling options
Among other notable gainers, shares of John Wood Group PLC added
4.3%, after HSBC lifted the oil-services firm to overweight from
neutral, citing prospects for attractive double-digit earnings
growth in 2013 and 2014.
Tesco PLC (TESO) advanced 1.6%, as Credit Suisse lifted the
supermarket retailer to outperform from neutral.
Admiral Group PLC put on 5.3%, after the car insurer reported a
15% rise in pretax profit and lifted dividends 25%. See: Admiral
Group '12 pretax profit, payout higher
Shares of Melrose Industries PLC climbed 2.7%. The investment
company reported a rise in 2012 pretax profit, raised its dividend
and said it expects further progress in 2013. See: Melrose '12
pretax net, dividend up; sees progress
Shares of Legal & General Group PLC picked up 2%, as the
investment and insurance firm posted a rise in its full-year
dividend and said it expects earnings to grow in 2013. See: Legal
& General year profit up; sees '13 rise
Outside the major index in London, shares of Ladbrokes PLC fell
0.6%, after UBS cut the betting firm to neutral from buy.
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