Most U.K. Stocks Decline; BP Retreats as Profit Misses Estimates

Most U.K. stocks declined as BP Plc (BP/) reported earnings that missed analysts’ estimates and concern grew that U.S. lawmakers will fail to increase the nation’s debt limit.

BP, Europe’s second-largest oil company, dropped 1.9 percent. BG Group Plc (BG/), the U.K.’s third-biggest natural gas producer, surged 3.8 percent after saying that profit doubled in the second quarter. GlaxoSmithKline Plc (GSK) rose 1.2 percent as Britain’s largest drugmaker announced an extra 300 million pounds ($492 million) of cost savings.

The benchmark FTSE 100 Index (UKX) rose 10.87, or 0.2 percent, to 5,936.13 at 2:02 p.m. in London as three stocks declined for every two that gained. The gauge has dropped 2.6 percent since this year’s high on Feb. 8 as investors speculated that Europe’s sovereign-debt crisis will spread. The broader FTSE All-Share Index advanced 0.2 percent today, while Ireland’s ISEQ Index rose retreated 0.5 percent.

“Markets are becoming increasingly nervous about the possibility of default in the U.S.” said Michael Hewson, a market analyst at CMC Markets Plc. “Politicians in the U.S. are playing a very dangerous game and investors are nervous because of that. Maybe they don’t really grasp how dangerous their behavior is.”

Democrats and Republicans discussed how to increase the statutory limit on the U.S. national debt overnight. President Barack Obama and the Republican House Speaker John Boehner attacked each other’s proposals in speeches yesterday.

U.K. Growth

In the U.K., the Office for National Statistics reported that the country’s economy barely grew in the second quarter. GDP rose 0.2 percent from the first quarter, matching the median of 32 forecasts in a Bloomberg News survey.

London-based BP dropped 1.9 percent to 466.45 pence after posting second-quarter profit adjusted for one-time items and changes in inventory of $5.6 billion, compared with the average estimate of $5.9 billion in a Bloomberg survey of 12 analysts.

BG Group jumped 3.8 percent to 1,479 pence for the biggest increase on the FTSE 100 after it said second-quarter net income doubled to $1.24 billion. Gas prices rose 58 percent from a year earlier and production climbed 3 percent to 58.9 million barrels of oil equivalent.

Glaxo gained 1.2 percent to 1,380 pence after reporting sales that were in line with estimates. The drug company also said its cost-reduction plan will yield an extra 300 million pounds of savings.

Pennon Upgrade

Pennon Group Plc (PNN) climbed 3 percent to 732 pence and United Utilities Group Plc advanced 1.7 percent to 608 pence after Liberum Capital Ltd. said the two companies have the “best total return characteristics” in the U.K. water industry.

Separately, JPMorgan Chase & Co. upgraded Pennon to “overweight” from “neutral.”

Pace Plc (PIC), the world’s biggest maker of digital television set-top boxes, surged 9.6 percent to 115.1 pence after saying profit before interest, taxes and amortization in the six months to June 30 was $68.4 million on revenue that was 21 percent higher at $1.19 billion.

Anglo American Plc (AAL) gained 1.7 percent to 3,079 pence as Diamond producer De Beers, which is 45 percent owned by Anglo American, reported record sales.

Xstrata Plc (XTA) gained 1.3 percent to 1,376 pence after the world’s largest exporter of power-station coal, said first-half output of the fuel rose 4.9 percent

Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, slumped 3 percent to 1,552 pence for the second-biggest decline in the FTSE 100 after Royal Bank of Scotland Group Plc cut its rating on the shares to “hold” from “buy.”

Cranswick Plc (CWK) plunged 12 percent to 649 pence after saying first-quarter sales fell and trading in the first quarter was “challenging.” Peel Hunt cut the shares to “hold” from “buy.”

To contact the reporter on this story: Conor Sullivan in London at csullivan39@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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