U.K. Stocks Drop From a Seven-Week High as ARM Declines

U.K. stocks slipped from their highest level in seven weeks, trimming the FTSE 100 (UKX) Index’s fourth consecutive weekly gain, as Google Inc. and Microsoft Corp. posted worse-than-projected earnings.

ARM Holdings Plc (ARM) lost 2.6 percent, leading European technology companies lower before it publishes half-year results next week. IMI Plc (IMI) gained 2 percent as Citigroup Inc. listed the engineering company among its most preferred stocks.

The FTSE 100 declined 3.69 points, or 0.1 percent, to 6,630.67 at the close, paring a loss of as much as 0.6 percent in the final 30 minutes of trading in London. The gauge still advanced 1.3 percent this week as Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank remains flexible on when to reduce its asset purchases. The FTSE All-Share Index lost 0.1 percent today, while Ireland’s ISEQ Index fell 0.3 percent.

“An altogether more repressed sentiment prevails today,” Brenda Kelly, a market strategist at IG Group, wrote in a note to clients today. “Disappointing earnings from the global technology sector threaten to take the wind out of the stock market’s sails.”

Google, the owner of the Internet’s most popular search engine, posted second-quarter sales and profit that missed estimates as advertisers shifted their budgets toward mobile devices, lowering the average cost per click. Microsoft posted fiscal fourth-quarter profit that fell short of analysts’ projections because of weaker demand for personal computers running its Windows operating system.

ARM Holdings lost 2.6 percent to 897.5 pence for its fourth decline this month. The company, which designs chips for devices running Google’s Android software, will release half-year earnings on July 24.

British Banks

U.K. lenders dropped, with HSBC Holdings Plc (HSBA) slipping 0.5 percent to 737.5 pence. Investec Plc lowered its rating on the FTSE 100’s heaviest stock to hold from buy. The stock’s price doesn’t reflect potential analyst cuts to net-interest margin and income forecasts, according to Investec.

Lloyds Banking Group Plc (LLOY) fell 1.1 percent to 69.25 pence. Two people familiar with the matter said the U.K. government has considered selling as much as 5 billion pounds ($7.6 billion) of the lender’s shares. The state may sell a 5 to 10 percent stake as soon as September, the people said.

IMI increased 2 percent to 1,400 pence, extending its highest price since at least 1988. Citigroup analyst Mark Fielding predicted further “significant margin upside” for the company. He also cited its strong balance sheet.

Vodafone Group Plc (VOD) added 1.3 percent to 193.85 pence, its biggest advance in two weeks. The world’s second-largest wireless carrier posted a smaller drop in first-quarter service sales than analysts had predicted as markets outside Europe improved.

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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