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U.K. Stocks Fall From 2008 High on U.S. GDP

U.K. stocks fell from a 4 1/2-year high as a report showed the U.S. economy, its largest trading partner, unexpectedly contracted in the fourth quarter.

Imperial Tobacco Group Plc (IMT), Europe’s second-biggest tobacco company, slid 4.3 percent after saying first-half profit will decline. Petrofac (PFC) Ltd. slumped 7 percent as Italian peer Saipem SpA cut its profit forecasts. Antofagasta Plc (ANTO) fell the most in 16 months after projecting increased costs. WPP Plc (WPP) climbed to a 12-year high as Jefferies Group Inc. advised investors to buy the shares.

The benchmark FTSE 100 Index lost 16.08 points, or 0.3 percent, to 6,323.11 at the close in London as separate data showed the Spanish economy also contracted in the fourth quarter. The stocks gauge has still rallied 7.2 percent this month, on course for the biggest jump since October 2011. The broader FTSE All-Share Index also fell 0.3 percent today, while Ireland’s ISEQ Index slipped 0.5 percent.

“Upside momentum may be hard found in the days ahead, with the poor growth figures from the U.S. and Spain today reminding the market that perhaps it isn’t the right time to be aggressively bullish,” Ishaq Siddiqi, a market analyst at ETX Capital in London, wrote in a note. “It is difficult at this point to see what would act as a catalyst for a resumption of January’s rally next month.”

The number of shares changing hands in FTSE 100 (UKX) companies was 26 percent greater than the 30-day average today, according to data compiled by Bloomberg.

U.S. Economy

The U.S. economy, the world’s largest, shrank in the fourth quarter, restrained by the biggest plunge in defense spending in four decades and dwindling inventory growth. Gross domestic product dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, Commerce Department figures showed.

The Federal Reserve will probably renew its commitment to continue buying assets into next year at a policy decision, according to a Bloomberg News survey of 44 economists. The Federal Open Market Committee concludes its two-day meeting today and will publish its statement after the close of European equity trading.

In the euro area, economic confidence rose more than economists forecast in January, adding to signs that the 17- nation currency bloc may be emerging from a recession. An index of executive and consumer sentiment rose to 89.2 from a revised 87.8 in December, the European Commission in Brussels said today. Economists had forecast a reading of 88.2, according to the median of 30 estimates in a Bloomberg survey.

Imperial Tobacco

Imperial Tobacco lost 4.3 percent to 2,361 pence, the lowest price in almost three months. The company said first-half profit will decline because of worsening conditions in Europe and reported a smaller gain in first-quarter revenue than analysts estimated.

British American Tobacco Plc (BATS), Europe’s largest cigarette maker, slipped 0.8 percent to 3,275.5 pence.

Petrofac slumped 7 percent to 1,615 pence, the biggest drop in 16 months. Saipem plunged 34 percent in Milan trading after Europe’s largest oil-service provider cut profit forecasts, stoking concern that earnings across the industry will be lower than analysts estimated.

JKX Oil & Gas Plc (JKX), an energy producer active in Ukraine and Russia, fell 5 percent to 58.88 pence, the lowest price in nine years.

Antofagasta Forecasts

Antofagasta sank 8.3 percent to 1,169 pence, the largest decline since September 2011, as it forecast the cost to mine a pound of copper would increase by 14 percent this year. The mining company said it sees 2013 copper output at 700,000 tons and gold output at 260,000 ounces.

Rio Tinto Group slipped 0.7 percent to 3,552 pence. The second-biggest mining company is considering a temporary halt to construction at its $6.2 billion Oyu Tolgoi copper and gold project in Mongolia as the government demands a greater share of profit from the mine, two people familiar with the plans said.

WPP advanced 1.3 percent to 990 pence, the highest price since September 2000. Shares of the world’s largest advertising company were raised to buy from hold at Jefferies.

Phoenix Group Holdings soared 9.3 percent to 630 pence, the largest gain since June. The U.K.’s biggest manager of closed life-insurance funds plans to raise 250 million pounds ($394 million) in a share sale to lower its debt burden.

Imagination Technologies Group Plc (IMG) rallied 13 percent to 497.9 pence, snapping five days of losses. Morgan Stanley upgraded the U.K. designer of chip technology for phones and tablet computers to overweight, the equivalent of buy, from equal weight.

To contact the reporters on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net; Adria Cimino in Paris at acimino1@bloomberg.net

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

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