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Tobacco shares fall on possible UK regulation

The Associated Press

Tobacco company shares fell in trading Wednesday on the news that the British government may follow Australia's lead and impose plain packaging for cigarettes.

The UK publication The Guardian reported that ministers there will introduce plain packaging for cigarettes after becoming convinced that the branding is a key factor in why young people start to smoke. The report says that the legislation will be announced in the Queen's speech in May. It is also expected to ban smoking in cars carrying anyone younger than 16.

Australia's law, which replaces logos on tobacco packs with graphic warnings about the health impact of the products, took effect in December and is gaining some global support.

Nearby New Zealand is also considering imposing a similar packaging rule but is waiting until a challenge to Australia's law is resolved.

Tobacco companies lost a legal challenge in Australia's highest court last year, but the World Trade Organization has agreed to hear a complaint about the law from several tobacco-growing countries. New Zealand, Norway and Uruguay have lined up behind Australia in the WTO case.

The news that the British government may also follow suit sent the shares of major tobacco stocks down by early afternoon.

Shares of Phillip Morris International Inc., based in the United States but with operations overseas, fell 67 cents to $91.61 in afternoon trading. The shares of Imperial Tobacco Group PLC lost 2.4 percent and British American Tobacco PLC fell 1.3 percent in trading in London.