U.K. stocks fell for a second day, with the FTSE 100 Index continuing its retreat from a six-month high, amid renewed concern about Europe’s debt crisis and as tensions between Japan and China escalated.
Aviva Plc led a selloff in financial companies as analysts downgraded the insurer’s shares. Royal Bank of Scotland Group and Barclays Plc dropped more than 1.5 percent. BP Plc, Europe’s second-biggest oil company, retreated 2.7 percent as crude dropped for a second day.
The FTSE 100 fell 26.15 points, or 0.4 percent, to 5,867.37 at 3:04 p.m. in London, bringing it’s two-day decline to 0.8 percent. The broader FTSE All-Share Index dropped 0.5 percent today, while Ireland’s ISEQ Index slipped 0.3 percent.
“With tensions getting worse in Asia and uncertainty growing, investors are becoming once again more risk averse,” said Markus Huber, a trader at ETX Capital in London. “It wouldn’t be too much of a surprise if markets are once again tending weaker today with continuing profit taking.”
The FTSE 100 climbed to the highest level since March last week after the European Central Bank pledged an unlimited bond- buying program and the Federal Reserve announced a third-round of quantitative easing to support economic growth.
The volume of shares changing hands on the FTSE 100 was 23 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Elsewhere, thousands of people in China protested outside the Japanese Embassy in Beijing over a territorial dispute in China and Japan’s worst diplomatic crisis since 2005 that threatens a trade relationship worth more than $340 billion.
Tensions over islands, known as Diaoyu in Chinese and Senkaku in Japanese, complicate policy makers’ efforts to fortify growth in Asia’s biggest economies as Europe’s debt crisis saps demand for exports.
Spain auctioned 4.6 billion euros ($6 billion) of bills today, beating its maximum target of 4.5 billion euros. It sold 12-month bills at 2.835 percent, compared with 3.07 percent when they were last sold on Aug. 21, and 18-month bills at 3.072 percent, compared with 3.335 percent.
Aviva fell the most on the FTSE 100 today, sliding 4 percent to 344.8 pence. Bank of America Corp. downgraded the U.K.’s second-largest insurer to underperform, the equivalent of a sell rating, from neutral. Deutsche Bank AG lowered its recommendation to hold from buy, citing a 40 percent gain in the shares since June.
RBS led a gauge of bank shares lower, sliding 3.3 percent to 265.4 pence. Barclays retreated 1.6 percent to 224.25 pence and Lloyds Banking Group Plc lost 2.8 percent to 38.76 pence.
BP led energy companies lower as oil fell. Crude futures declined as much as 1.3 percent to $95.39 a barrel in New York today, extending the biggest drop in two months. The contracts plunged more than $3 in less than a minute yesterday as October options were about to expire.
BP retreated 2.7 percent to 439.15 pence, the largest drop in two weeks. Tullow Oil Plc slid 1.9 percent to 1,417 pence and BG Group Plc sank 2.2 percent to 1,263 pence. Royal Dutch Shell Group Plc, the biggest oil company in Europe, slipped 0.9 percent to 2,234 pence.
Volex Plc plummeted 27 percent to 69.5 pence, the largest drop since January 2008. The U.K. maker of power cords for computers and devices including Apple Inc.’s iPhone cut its earnings forecast, citing an unexpected drop in demand from its largest customer in the consumer sector.
Wilmington Group Plc advanced 6.9 percent to 116 pence, the highest in almost 14 months. The publisher of directories and periodicals said full-year net income increased 13 percent to 4.88 million pounds ($7.9 million).