U.K. Stocks Decline as U.S. Economy Grows Less Than Forecast; HSBC Falls

U.K. stocks dropped for a third day, extending the benchmark FTSE 100 Index’s loss this week, after a report showed the U.S. economy grew less than forecast in the second quarter.

Royal Dutch Shell Plc and HSBC Holdings Plc led shares on the FTSE 100 lower after the U.S. government report showed growth in the world’s largest economy slowed to a 2.4 percent annual rate in the second quarter. Shire, the Dublin-based drugmaker, lost 2.4 percent as Sanford C. Bernstein & Co. cut its recommendation on the stock.

The FTSE 100 fell 55.93, or 1.1 percent, to 5,258.02 at the 4:30 p.m. close in London, bringing the gauge’s decline this week to 1 percent and paring its 6.9 percent rally for the month. The FTSE All-Share Index declined 1.1 percent and Ireland’s ISEQ Index retreated 0.3 percent today.

“The brief rally seen over the last two weeks has lost its steam, with disappointing macro data failing to fuel what many hoped would be a long-term rally,” said Chris Purdy, a trader at Spreadex Ltd. in London. U.S. gross domestic product figures “confirmed what many analysts had been suspecting -- growth was softening as tax credits expired and financial systems remain in a tenuous state.”

U.S. Economy

The 2.4 percent increase to the size of the U.S. economy in the second quarter trailed a median forecast of 2.6 percent of economists surveyed by Bloomberg News. The Commerce Department upwardly revised economic growth in the first quarter to 3.7 percent, showing a jump in inventories. Business investment climbed at the fastest rate since 1997. Corporate spending on equipment and software jumped at a 22 percent annual rate.

Federal Reserve Chairman Ben S. Bernanke last week said the central bank is prepared to take further policy actions if the world’s largest economy “doesn’t continue to improve.”

Shell, Europe’s largest oil company, lost 1.6 percent to 1,754.5 pence and HSBC, the region’s biggest bank, declined 1.6 percent to 646 pence. BP Plc retreated 1.8 percent to 405.95 pence. The three companies led the FTSE 100 index lower.

Shire lost 2.4 percent to 1,455 pence. Bernstein cut its recommendation on the shares to “market perform” from “outperform,” according to a report.

United Business Media Ltd. declined 3.9 percent to 550.5 pence. The publisher of InformationWeek said first-half net income dropped to 45.5 million pounds ($71.5 million) from 48 million pounds a year earlier.

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To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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