U.K. Stocks Drop, Paced by Friends Provident; Barclays Declines

U.K. stocks fell for a third day, led by Friends Provident Plc as UBS AG lowered its price estimate on the shares by 17 percent. Barclays Plc dropped on concern it may write down as much as 10 billion pounds ($21 billion).

Rio Tinto Group advanced as Deutsche Bank AG said consolidation in the industry would be ``positive for metals and mining companies.''

The FTSE 100 Index lost 77, or 1.2 percent, to 6,304.9. The measure lost 3.5 percent over the last five days, the second straight weekly loss. The FTSE All-Share Index dropped 1.3 percent on the day to 3,237.32. Ireland's ISEQ Index added 1.2 percent to 7,128.69.

Friends Provident tumbled 7.2 percent to 148.7 pence, its lowest in almost three years. UBS lowered its price estimate on the stock of the U.K. life insurer to 175 pence from 210 in resumed coverage. A merger between Resolution Plc and Friends Provident collapsed after Standard Life Plc agreed to buy Resolution.

``Investors are currently according no value to new business at Friends Provident,'' Roger Hill, London-based analyst at UBS wrote in a report to clients. ``The termination of the merger agreement comes at a time when the U.K. industry appears to be struggling to show real growth and there are signs of greater competition.''

Standard Life, the U.K. insurer competing with Pearl Group Ltd. to buy Resolution, dropped 3.9 percent to 243.75 pence.

``It's a general contagion spreading across the financial sector, with insurers, we have also seen share price writedowns on the credit insurers in the U.S,'' said Greg Smith, managing director of the investment adviser Fat Prophets U.K. Ltd. in London.

Barclays, Britain's third-biggest bank, slumped 2.4 percent to 474.5 pence. Barclays spokesman Alistair Smith said there was ``absolutely no substance'' to the writedown speculation.

``Bad news regarding U.K. banks continues to take a toll on share prices and in particular concerns appear to have moved on to their capital positions and their ability to take further potential writedowns,'' London-based JPMorgan Chase & Co. analyst Carla Antunes da Silva wrote in a note to clients today.

Rio Tinto, the world's third biggest mining company, climbed 6.2 percent to 5,624 pence.
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