U.K. Stocks Drop Even as FTSE 100 Rises for 11th Month

U.K. stocks declined, even as the FTSE 100 (UKX) and FTSE All-Share Indexes both posted their longest-ever streaks of monthly gains, as mining companies fell and a report showed U.S. business activity shrank this month.

Commodity producers contributed the most to the FTSE 100’s decline as BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, lost more than 1.5 percent. BP Plc (BP/), Europe’s second-largest oil company, climbed the most in three months, while Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, rose to its highest price in two months.

The FTSE 100 slipped 27.9 points, or 0.4 percent, to 6,430.12 at the close in London, erasing an advance of as much as 0.4 percent. The equity benchmark still added 0.3 percent in April, for its longest stretch of monthly gains since 1984. The broader FTSE All-Share also climbed 0.3 percent this month, increasing for an 11th month for the first time since the index was formed in 1962.

“We have a neutral positioning in the U.K. and have become more cautious as it’s trending close to its long-term average,” said James Butterfill, who helps oversee 29 billion pounds ($45 billion) as head of global equity strategy at Coutts & Co. in London. “Support for U.K. equities is coming from earnings outstripping expectations so far, and by a considerable margin on the bottom line in some cases.”

The FTSE 100 trades at 12.1 times estimated annual earnings, compared with a seven-year average of 11.3 times, and a November 2008 low of 6.6 times projected annual earnings.

Earnings Season

Six of the seven FTSE 100 companies that have posted quarterly earnings so far this results season have beaten analysts’ estimates, data compiled by Bloomberg show. The number of shares changing hands on FTSE 100-listed companies was 47 percent greater than the average of the past 30 days, according to data compiled by Bloomberg. Ireland’s ISEQ Index decreased 0.5 percent today.

In the U.S., Britain’s biggest trading partner, a report showed business activity shrank in April, its first contraction in more than three years. The MNI Chicago Report’s business barometer fell to 49 in April from 52.4 in March. The median forecast of economists surveyed by Bloomberg had called for a reading of 52.5. A reading less than 50 signals contraction.

The European Central Bank will cut its interest rate to a record low of 0.5 percent at a meeting on May 2, according to the median forecast of economists surveyed by Bloomberg. The U.S. Federal Reserve starts a two-day policy meeting today and may consider renewing its commitment to bond buying. The Bank of England meets next week.

Mining Companies

Commodity producers posted the biggest retreat of the 19 industry groups on the Stoxx Europe 600 Index. Lonmin Plc slumped 5.7 percent to 269 pence. The platinum producer said it closed a furnace in South Africa after an unspecified incident. BHP Billiton and Rio Tinto Group dropped 2.2 percent to 1,791 pence and 1.8 percent to 2,919 pence, respectively.

Anglo American Plc, the world’s biggest platinum producer, lost 2.7 percent to 1,565 pence.

BP, the third-heaviest stock on the FTSE 100, gained 2.1 percent to 466.4 pence. The oil producer posted earnings, adjusted for one-off items and inventory changes, of $4.2 billion in the first quarter, exceeding the $3.2 billion average estimate of analysts surveyed by Bloomberg. BP posted profit of $4.7 billion in the year-earlier period using the same measure.

Lloyds, RBS

Lloyds added 1.6 percent to 54.3 pence as the lender completed its biggest monthly advance since November. First-quarter pretax profit almost tripled to 1.48 billion pounds from a year earlier, according to a statement. Analysts had predicted profit of 1.03 billion pounds.

Royal Bank of Scotland Group Plc (RBS) surged 4.2 percent to 306.3 pence. Britain’s biggest government-owned lender will report its first-quarter earnings on May 3.

Asos Plc (ASC) added 4 percent to 3,200 pence. Profit before taxes rose to 25.7 million pounds in the six months through February, the U.K.’s largest internet-only retailer said.

Carphone Warehouse Group Plc (CPW) surged 15 percent to 235 pence, the biggest rally since the company started trading as a separate entity in March 2010. The retailer will pay 500 million pounds for Best Buy Co.’s 50 percent stake in their European mobile-phone joint venture, according to separate statements from the two companies.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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