By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Vodafone Group PLC led U.K. stocks lower
on Tuesday after the telecom firm reached a deal to sell its stake
in Verizon Wireless to Verizon Communications Inc. for $130
billion.
Shares of the U.K. heavyweight (VOD) fell 5% after the deal,
which was announced Monday after the markets closed in Europe.
Verizon will pay Vodafone about half of the acquisition in cash and
the other half in company stock. Verizon shares were down 2.4% on
Wall Street.
Vodafone said on Tuesday it would launch a 6-billion-pound
($9.35 billion) investment plan called Project Spring to improve 4G
networks, increase broadband access and improve customer
service.
When the rumors of the deal first came out last Thursday,
Vodafone shares rallied 8.2%, and analysts described the drop on
Tuesday as a case of "buy the rumor, sell the fact."
More broadly in London, the FTSE 100 index fell 0.6% to close at
6,468.41.
Property stocks were among some of the biggest decliners after a
round of ratings downgrades from Deutsche Bank. The bank cut
British Land Co. PLC , off 2.6%, to hold from buy, and Land
Securities Group PLC , off 3%, was cut to sell from hold.
"We expect tapering of U.S. quantitative easing over the next 12
months to reduce the liquidity in the global financial system on
which property shares thrive. While we do not expect much impact on
the direct property market, we expect property shares to suffer
while this transition takes place," the analysts said.
On a more upbeat note, mining firms were higher, tracking gains
for most metals prices.
Shares of BHP Billiton PLC (BHP) gained 0.8%, Antofagasta PLC
added 0.9% and Rio Tinto PLC (RIO) put on 0.8%.
Shares of Associated British Foods PLC picked up 1.2% after
Exane BNP Paribas lifted the firm to outperform from
underperform.
Shares of Centrica PLC gained 1.1% after Deutsche Bank lifted
the energy firm to buy from hold.
"We expect Centrica's upstream energy business to benefit from a
tighter European gas market over the coming two years while the
downstream British Gas business should return to growth against a
backdrop of a recovering U.K. economy," the analysts said.
Outside the main index, Debenhams PLC lost 4.2% after Exane BNP
Paribas cut the department-store firm to underperform from
neutral.
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