U.K.’s FTSE 100 Falls as BSkyB, Rolls-Royce Decline

U.K. stocks retreated for a second day, extending the FTSE 100 Index’s weekly decline, as investors weighed results from British Sky Broadcasting Group Plc to Pearson Plc.

BSkyB tumbled the most in two months after reporting earnings. Rolls-Royce Holdings Plc (RR/) fell 3.2 percent as Deutsche Bank AG downgraded the shares. Pearson surged to a 12-year high as the publisher of the Financial Times newspaper said first-half revenue climbed.

The FTSE 100 slid 33.16 points, or 0.5 percent, to 6,554.79 at the close in London. The benchmark gauge has retreated 1.1 percent this week, ending four weeks of consecutive gains. The broader FTSE All-Share Index lost 0.5 percent today, while Ireland’s ISEQ Index slumped 1.1 percent as the country’s central bank cut its economic growth forecast for 2013.

“After being obsessed with central-bank policy, we’ve gotten more certainty on that front and we’re now focused on how corporates are doing,” Ian Williams, a market strategist at Peel Hunt LLP in London, said by telephone. “Company earnings aren’t quite as strong we’d like to support valuations. We’ve had a strong run and we need to see a little more evidence from corporates.”

The FTSE 100 (UKX) has climbed 18 percent since European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro at a speech in London one year ago today. The measure is up 11 percent in 2013.

Volume Drops

The volume of shares changing hands in FTSE 100-listed companies was 32 percent lower than the 30-day average today, according to data compiled by Bloomberg.

Equities briefly pared declines after a measure of U.S. consumer confidence rose in July. The Thomson Reuters/University of Michigan final index of sentiment increased to 85.1 from 84.1 the prior month. The median forecast in a Bloomberg survey called for a reading of 84.

BSkyB (BSY) sank 3.3 percent to 822 pence, the biggest slide since May 16, even as the U.K.’s largest pay-TV broadcaster reported sales that topped estimates. The company unveiled a box to link televisions to the Internet and said it will buy back 500 million pounds of shares.

Morgan Stanley said the company’s investment in connected services will probably trim 2014 earnings estimates. Numis Securities Ltd. cut the stock to add from buy, citing recent gains in the shares.

Rolls-Royce tumbled 3.2 percent to 1,200 pence. The world’s second-largest commercial-aircraft engine maker was cut to sell from hold by Deutsche Bank analysts Benjamin Fidler and Milene Kerner, who cited rising civil aerospace unit costs and poor cash flow.

The shares surged 5.1 percent to the highest price in more than two decades yesterday as profit beat projections.

Pearson Profit

Pearson (PSON) jumped 6.2 percent to 1,329 pence, the highest price since May 2001. The media and education company said first-half revenue climbed 7 percent to 2.76 billion pounds ($4.3 billion), surpassing the 2.69 billion-pound average prediction of analysts. Profit fell 26 percent as the company invested in new products.

Ryanair Holdings Plc (RYA), the discount airline operator that’s the second-biggest stock in Ireland’s ISEQ index, declined 1.7 percent to 7.23 euros in Dublin. Kerry Group, a supplier of food ingredients, sank 1.4 percent to 45.24 euros.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

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

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